IMF-linked plan to boost local currency bond market unveiled
ISLAMABAD: The government on Tuesday announced that the general public would be allowed to trade government securities, including treasury bills and bonds, through the stock market as part of efforts to improve compliance under the International Monetary Fund (IMF) programme currently being reviewed by a visiting staff mission for the disbursement of around $1.2 billion. The announcement of a…
Pakistan's government has unveiled a plan to boost the local currency bond market in an effort to comply with the International Monetary Fund (IMF) program being reviewed by a staff mission. The announcement came after a meeting between Finance Minister Muhammad Aurangzeb and the IMF team, led by Iva Petrova, during which they discussed various sectors including power, privatization, petroleum, federal revenue, and the automobile industry.
The IMF-linked plan outlines reforms for the development of the Local Currency Bond Market (LCBM) and is based on a joint diagnostic study by the IMF and World Bank. The government aims to deepen, widen, and strengthen the market for government and corporate securities denominated in Pakistani rupees. This strategic action plan will be reviewed by the IMF executive board and, if successful, will entitle Pakistan to receive approximately $1.2 billion under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) by the end of October or early November.
The current concentration of government securities holdings by commercial banks at 78 percent highlights a need for greater market liquidity and diversity. The plan seeks to address this issue by allowing eligible bank customers to trade exchange-listed government securities through their banks, with the oversight of the State Bank, Securities and Exchange Commission of Pakistan, Pakistan Stock Exchange, and Central Depository Company.
In order to achieve this, the plan outlines five strategic objectives: strengthening institutional capacity and coordination, ensuring clear ownership and accountability, making primary issuance more predictable and market-based, building a functioning secondary-market liquidity and private securities-financing market, and modernizing market infrastructure while removing legal and tax impediments to trading and secured funding.
The plan also calls for a review of the primary dealer framework for the fiscal year 2027-28 to include secondary-market performance metrics.
Written by urgent.news from Dawn - Pakistan's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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