Pakistan to Tap Overseas Nationals for Funds to Revive Economy

(Bloomberg) -- Pakistan will raise $500 million in March through a fund aimed at its nationals living overseas, as South Asia’s second-biggest economy seeks investment after averting a balance-of-payment crisis.

Pakistani citizens living abroad will be asked to invest in the fund managed by the Board of Investment and the central bank, Haroon Sharif, the chairman of the state-run agency, said in an interview in Islamabad. Prime Minister Imran Khan’s administration will also sell a so-called diaspora bond in January, finance ministry spokesman Khaqan Hassan Najeeb said in a separate interview Friday.

Khan’s six-month-old government is tapping different sources to overcome a nearly $12 billion financing gap and boost its dwindling foreign reserves. He has already secured $6 billion in loans from friendly nations, including Saudi Arabia and the United Arab Emirates. Finance Minister Asad Umar said last week an investment package with China is almost complete, while talks with the International Monetary Fund for a bailout loan are ongoing.

An accord with Riyadh for $3 billion of oil supply on deferred payments will be signed during Saudi Crown Prince Mohammed Bin Salman’s likely visit to Pakistan in mid-February, Sharif said. The Saudi and U.A.E packages were secured by premier Khan during his visit to the two countries last year.

Sharif said international financial institutions have pledged to contribute to the fund, which will be used to develop the nation’s rural areas. Separately, he said, Pakistan has received “concrete” investment proposals of up to $40 billion from China, Saudi Arabia, the U.A.E, Malaysia and South Korea.

“We’re looking into that as they want to make these investment in 3 to 5 years,” he said.

The government is set to raise up to $3 billion from the diaspora bond, or Pakistan Banao Certificate, on Jan. 31 to boost foreign reserves, Dawn newspaper reported Jan. 26, citing Finance Minister Umar. The bonds of three- and five-year maturities will carry a coupon of 6.25 percent and 6.75 percent, respectively, he said.

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