Pakistan Sets Its Sights On the Eurobond Market

PAKISTAN'S leading stock market, in the heart of Karachi, has recently regained some buoyancy. There is brisk activity in the Karachi Stock Exchange building, showing few signs of last year's political crisis and its impact on key economic indicators.

Foreign exchange reserves are back up to $2.1 billion, after dropping to less than $300 million last year - only enough to finance 10 days of imports. ``The reserves and other signs that we are out of the economic crisis are heartening, because this would prompt more and more foreign investors to come here,'' says a leading stockbroker who requested anonymity.

The rise in exchange reserves is largely the result of short-term borrowing from banks and international financial institutions. These institutions are increasingly convinced that the government of Prime Minister Benazir Bhutto - now in its 10th month - is on the right track. The government has sharply reduced its own bank borrowings and has tried to lower the budget deficit to less than 6 percent of gross domestic product - down from 8 percent last year.

With reserves stable, the government has set its sights on the Eurobond international markets as a means of raising much-needed capital. By November, the government plans for the first time to issue bonds worth $200 million on the Eurobond markets.

If successful, the bond offer will help Pakistan to convert some of its short-term loans into medium-term liabilities, giving the country much-needed breathing space. But recent increases in United States interest rates have dampened investors' enthusiasm. The worry here is that investors will find US investments more attractive and pull their money out of the international bond market. Senior officials are not concerned, however. ``When you go to the Eurobond market, particularly when you are a new entrant, you should enter when the timing is best for you domestically, because internationally we do not have any control,'' Mohammad Yaqub, governor of the State Bank of Pakistan, said recently. Many investment analysts are anxious to see the outcome of the offer, because private companies may follow suit.

``Going to the Euromarket is of prime importance to Pakistan, not only for the government but also for Pakistani companies,'' says Nasir Bukhari, chief executive officer of Khadim Ali Shah Bukhari and Co., a leading brokerage house.

This year, a leading Pakistani company for the first time floated bonds worth $45 million on the Eurobond market. Two other companies are preparing similar ventures. Many businesses see this as an ideal opportunity to bail themselves out of domestic interest rates, which run as high as 19 percent. International interest rates are about 10 percent to 11 percent. Pakistan to turn clocks back

PAKISTAN plans to turn its clocks back one hour this October. The government says it hopes the move will save energy by adding an extra hour of light at the end of the day. Although an exact date has not been set, the time change will be the first time that this country of 120 million people has tampered with its clocks.

The government has not yet announced how the public will be informed of the time shift. In a country where three-fourths of the population is still illiterate, the task of getting the message out has raised some concern. In urban areas, many people may want to give this measure a chance after a year of frequent power cuts, which have kept parts of larger cities without electricity for up to six hours a day. In recent weeks, the city of Karachi - Pakistan's business capital - has experienced frequent power cuts. ``If energy could be saved with changing the time, so be it. That would be some relief and people will happily accept it,'' says one local official who asked not to be named.

``The measure is aimed at the cities, not at the villages, and hopefully, it will yield some benefit,'' says Mike Woodruff, chief executive of the Hub Power Co. project near Karachi. Mr. Woodruff adds that the measure could be valuable both for its energy-saving potential as well as its symbolic importance in demonstrating that the government is trying to improve the energy situation.

``On the productivity side, it would be a very effective way of remaining in touch with the international markets. If we could open early, we would be able to have a longer working day,'' says Nasir Bukhari, a leading stockbroker in Karachi.