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This deal was structurally clever, ground-breaking and enormously encouraging for Pakistan. But the real reason it wins this award is what it says about Islamic liquidity and how quickly it can be mobilized if needed.
Pakistan has a more positive outlook than it once did. It has conducted a successful programme with the IMF, it has completed both conventional and Islamic Eurobonds and sukuks at a sovereign level, it has revived the privatization process that faltered after former president Pervez Musharraf was ousted, and it has successfully auctioned 3G and 4G telecom licences. After two years of stability there is a feeling that reform can be successfull and there is hope for the economy. The letter C no longer appears in Pakistan’s international ratings; after years in the wilderness the country is now B3/B-.
Time pressure
Nevertheless, not everything runs smoothly; in June Pakistan found itself with a pressing budgetary requirement. The 3G and 4G licences looked like an answer: what if the government could monetize the receivables from the international telcos that bought them? That money could then be used to import the commodities that Pakistan urgently needed.
