Finance Minister Ishaq Dar has said Pakistan will not seek debt restructuring from Paris Club creditor nations, as he seeks to restore market confidence after a credit rating downgrade.
Addressing a press conference in Islamabad on Sunday, he said the major reason behind Moody’s decision was concerns that Pakistan was seeking the rescheduling of $10 billion worth of debt owed to the Paris Club.
The new rating from Moody’s raised concerns that Pakistan could default on its foreign debt as the country contends with economic turmoil and a balance of payments crisis.
“We have decided not to go to Paris Club,” Dar said while addressing a press conference in Islamabad, adding that in consultation with Prime Minister Shehbaz Sharif it was decided that it wasn’t in the nation’s interest to ask for a restructuring.
“We will fulfil all sovereign [debt] commitment,” he said.
Dismissing market rumours that the government might extend maturities for its bonds, Dar said the country will fulfil all multilateral, international and bond obligations.
“God willing, we will pay the bonds on time,” said Dar.
“We are not extending the bond maturity.” Pakistan’s Eurobond matures in December this year.
Moody’s last week downgraded Pakistan’s credit rating from B3 into so-called junk territory at Caa1, citing external risks and concerns about its ability to secure required financing to meet its needs in the next few years.
Dar has previously said that the country will meet the requirement to raise nearly $35 billion in external financing for the 2022-23 financial year.
Eurobond and Sukuk – slumped while their yields skyrocketed at world markets after Prime Minister Shehbaz Sharif appealed for debt relief from rich nations to cope with the flood-hit economy.
The global bond investors interpreted the prime minister’s appeal as an indicator that the country was going to default on foreign debt repayments. Islamabad is scheduled to repay $1 billion against a maturing Sukuk on December 5, 2022.
Speaking about the IMF programme, the financial czar said the government had no intention of renegotiating an agreement with the global lender and pledged that the country will fulfil all its “sovereign commitments”.
PM Shehbaz last month made an appeal to the Paris Club for a debt moratorium after the already struggling economy was hit by devastating floods that the government estimates will cause economic losses of up to $30bn.
Nearly 33 million people have been affected and 7.9m displaced after flooding caused by abnormal monsoon rains.
Last month, the price of Pakistan’s US dollar-denominated global bonds –
LETTER OF CREDIT: Dar said all Letters of Credit (LC) payments up to $50,000 will be released by the next month.
He said the total pending cases of LC payments are 7,952 and 4,400 of them will be resolved after this decision. He said the government is committed to address the concerns of the business community.