Finance Ministry successfully completes important phase of reforms for development of domestic debt capital markets to make govt borrowing more competitive & transparent
ISLAMABAD ( Web News )
Ministry of Finance has successfully completed the first and important phase of reforms for development of domestic debt capital markets to make the government borrowing more competitive and transparent.
This was an important way forward towards development of domestic debt capital markets and will hopefully make the government borrowing more competitive and transparent.
According to bi-annual report of Annual Borrowing Plan for financial year 2023-24, released by Debt Management Office Finance Division Government of Pakistan as public disclosure requirement agreed with International Financial Institutions.
The report said that government implemented a range of reform measures as part of the program loans from the World Bank and the Asian Development Bank. These measures included publication of the National Medium-Term Fiscal Framework, Goods and Services Tax harmonization across federal and provincial jurisdictions, reforms related to debt management, property valuation and energy sector, digitalization of payment system, improved tax administration and compliance, improved quality of public expenditures and cash management, supply of credit for women, development of entrepreneurial capacity of women, and establishing strong institutional capacity for women in public and financial institutions.
Reforms and Initiatives related to Debt Management that were prioritized and implemented, in order to make debt management operations more comepetative and improve transparency in borrowing operations as well as diversify the investors base, government undertook amendments in the Treasury Bills Rules, 1998 and Ijara Sukuk Rules, 2008.
These amendments allow government to have flexibility of specifying the features (tenor, coupon rate, coupon frequency, repayment of principal etc.) of government securities; follow multiple mechanisms for raising of domestic debt through government securities; and raise debt through other mechanisms e.g. Capital Market Institutions including Pakistan Stock Exchange (PSX), Central Depository Company (CDC) and National Clearing Company Pakistan Limited (NCCPL)). Pursuant to these amendments, government carried out maiden auction of 1-year fixed rate Ijara Sukuk on PSX in December 2023. Healthy participation of Rs. 478 billion was witnessed against a target of Rs. 30 bn. Participation was mostly concentrated from non-banking sector, contributing around 90 percent.