After signing an agreement with the International Monetary Fund (IMF), the government is looking to meet most of its external financing needs through 10 to 15 year term global bonds and concessional multilateral loans in the medium term.
The government also plans to diversify local debt instruments through inflation-based bonds, list government papers on stock exchanges, and issue short-term Islamic and traditional floating rate products.
These projects are part of the medium term debt management strategy released over the weekend by the Finance Ministry for the financial years 2023 to 2026.
Global lenders provide borrowers with greater flexibility in various ways in terms of grace period, maturity and amortization structure, in such a situation the government would prefer to opt for a relatively higher average period for maturity while ensuring smooth completion of its external public debt portfolio.
At the same time, the government will step up its efforts to contract new commercial loans for a relatively longer period (three years or more) than the current rollover period of more than one year.
In addition, efforts will be made to reprocessing short-term to medium- and long-term commercial loans.
Under this strategy, the domestic market will remain the main source of funding to meet the fiscal deficit and refinancing existing domestic debt, for this purpose the government is planning to introduce a number of instruments to increase the number of investors and provide various investment opportunities.
According to the strategy, for this purpose, the government is also considering the option of introducing inflation-linked bonds to attract insurance companies, pension funds and mutual funds.
