Govt asked to raise funds through PSX

CEO says national infrastructure projects can be financed with bourse’s help

KARACHI:

The government should consider using the Pakistan Stock Exchange (PSX) to raise funds for national infrastructure schemes, suggested PSX CEO Farrukh H Khan.

Speaking at the Karachi Press Club on Tuesday, he said that a large number of investors were interested in pouring money into government projects, however, they lacked access to proper investment avenues.

He stressed that the government should go for listing all state-owned companies at the bourse including the loss-making enterprises as it would enhance transparency.

“Foreign governments use stock markets to raise financing for infrastructure but this is not happening in Pakistan,” he said.

According to the CEO, a stock market can facilitate the raising of both equity and debt.

Delivering a presentation on the occasion, PSX Head of Marketing Raeda Latif said that the government required funds not only for building new projects, but also for improving and maintaining the existing ones.

“The government needs funds for roads, bridges, railway network, dams and metros,” she said.

Citing various uses of the bourse, she noted that it could help raise financing for water supply schemes, gas pipeline projects and power generation. Circular debt could also be funded through the PSX, she said.

“The circular debt has inflated to Rs2.47 trillion. We need to arrest it at some stage and stop revenue leakages.”

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Moreover, she stressed the need for building a road network from farms to markets in rural areas, adding that the country was bound to suffer losses in the absence of proper logistics. She emphasised that in order to enhance exports, there was a need to improve local infrastructure.

Latif also called for enhancing the port capacity to increase trade activities. At present, the ships wait in long queues and incur demurrages.

“Hospitality and tourism sector needs to be revamped as well,” Latif highlighted.

Citing that Pakistan’s northern areas were beautiful, she voiced concern over the absence of suitable infrastructure to facilitate tourists.

As Pakistan was targeting net zero emissions, it could issue green bonds, she said.

“When we raise foreign investment, we are bound to pay interest. Owing to the conditions laid down by the International Monetary Fund, Pakistan cannot give sovereign guarantees.”

She urged the policymakers to devise new options as banks could not stretch beyond a certain figure of loans. “Foreign investment through the PSX is smooth and seamless,” she said.

 

Published in The Express Tribune, March 16^th, 2022.

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