ISLAMABAD:
A member of the National Assembly has raised questions about whether any competitive process was followed to borrow $750 million against Eurobonds, as details show the finance ministry had also received an offer for a $1 billion loan at a 0.2% higher rate but with a five-year maturity period.
The government took a $750 million loan for three years as a private placement against Eurobonds at roughly 7% interest. But Citibank had also made an offer to give $800 million to $1 billion for a minimum five years at 7.25% interest, according to these details.
MNA Aliya Kamran of the Jamiat-e-Ulema Islam-F has questioned whether any tender notice, request for proposals, bid evaluations or contract award details were publicly made and issued for the $1 billion commercial, $750 million Eurobonds and $250 million Panda Bonds transactions.
She has also questioned whether mandates for the $1 billion syndicated term finance facility of June 2025, the $750 million Eurobonds placement of April 2026 and the $250 million Panda Bonds of May 2026 were awarded to Habib Bank Limited and Standard Chartered Bank Limited without an open and competitive process under the Public Procurement Regulatory Authority (PPRA) rules of 2024.
However, HBL had earlier clarified it did not receive any fee for the Panda Bond transactions.
The MNA has inquired about the value of fees, commissions and underwriting charges paid against these three transactions.
Kamran has also asked whether the government will order an independent inquiry into the alleged violations of PPRA rules and fix responsibility for any mis-procurement causing loss to the national exchequer.
When contacted, Kamran confirmed she had raised these questions in June. The question has been admitted and will be taken up by the National Assembly for reply, said the legislator.
In April this year, Pakistan raised $750 million as a private placement through Standard Chartered Bank, with no competitive bidding, finance ministry officials said after the transaction was concluded. The debt was raised at 6.98% interest for a period of three years.
Sources said the federal government can raise commercial debt without competitive bidding, but at the time of raising the $750 million debt there was no such exemption for raising Eurobond debt.
In 2014, the federal government exempted commercial borrowings from the competitive bidding process defined under the PPRA law and rules. But the federal government had not exempted those loans from competitive processes that are publicly obtained, particularly Eurobonds. These loans have been taken for budget and balance of payment support.
About 12 years ago, the finance ministry had taken the exemption only for commercial borrowings on the ground that issuing advertisements may create panic in the market and could result in speculation. The exemption had been given for reasons of economic stability and national security, except for Eurobonds.
The details also showed the finance ministry opted for a relatively shorter three-year tenor debt at roughly 7% interest despite Citibank offering up to $1 billion for five years at 7.25% to 7.37%. Citibank had also offered six-year debt at 7.37 to 7.5% and seven-year tenor debt at 7.5 to 7.6%.
When contacted, a senior finance ministry official said late last month that the ministry preferred a lower interest rate over the longer tenor to save cost. The Ministry of Finance spokesman did not officially comment on the Citibank offer.
Transparency International-Pakistan last month observed that no public record of tender notices, requests for proposals, bid evaluations or contract awards was made available for the $750 million transaction, which, if true, would constitute a violation of PPRA Rules requiring transparency and competitive procurement.
Pakistan’s debt is on the rise, as the federal government remains unable to stop spending in areas that are now in the provincial domain while its revenues are also not enough to meet other expenses.
The State Bank of Pakistan (SBP) has reported that the federal government’s total debt, excluding liabilities and the International Monetary Fund (IMF) debt, increased by Rs5.9 trillion during the June-May 2025-26 period. As a result, debt stocks rose to Rs82 trillion by end of May, according to the new debt bulletin.
At this critical time, there is no permanent director general debt office. Despite repeated commitments to the IMF and the World Bank, the country’s Debt Management Office is operating under capacity.