Govt explores external financing options

With the International Monetary Fund (IMF) now on board, the government considers meeting most of its external financing needs in the medium term through 10- to 15-year international bonds and concessional multilateral loans. It also plans to diversify local debt instruments to inflation-based bonds, list government papers on the stock exchange, and issue short-term Islamic and conventional floating rate products. This is part of the new Medium-Term Debt Management Strategy, released by the Ministry of Finance on the weekend, for the fiscal years 2023 to 2026. “Availing maximum concessional external financing from bilateral and multilateral development partners” is one of the measures under the strategy to increase the average time to maturity of external debt portfolio over the medium term, it said, adding that other measures would include “borrowing more in 10 years’ and 15 years’ tenors in the international capital market while keeping the consideration for cost and risk trade-offs”. Multilateral loans provide maximum flexibility to the borrower in the choice of a grace period, final maturity and amortisation structure. In such cases, the government will prefer to choose a relatively higher average time to maturity while ensuring a smooth redemption profile of its external public debt portfolio.