Pakistan said on Sunday it would not seek to restructure the debt of Paris Club creditor countries, fearing the cash-strapped country could not repay its external debt as it faces economic turmoil and a balance of payments crisis.
Finance Minister Ishaq Dar made the statement at a press conference days after ratings agency Moody’s downgraded Pakistan’s credit rating from B3 to Caa1 last week, citing external risks and concerns as to its ability to obtain the financing necessary to meet its needs in the coming years. years.
Dar said the main reason behind the rating agency’s decision was fears that Pakistan is seeking to reschedule $10 billion in debt owed to the Paris Club – a group of wealthy creditor nations.
“We made a very conscious decision not to approach the Paris Club. We will manage our affairs and repay the debts of multilateral lenders on time,” he said.
Dar also assured that Pakistan would make payments on bonds maturing in December, dismissing reports that the country was going to postpone payments on international bonds.
The price of Pakistan’s US dollar-denominated global bonds – Eurobond and Sukuk – fell last month as their yields soared after Prime Minister Shehbaz Sharif called for debt relief for rich countries to cope to the economy affected by the floods.
The call was interpreted by investors as an indication that Pakistan was going to default on foreign debt repayments.
Dar had previously said the country would meet the requirement to raise nearly $35 billion in external financing for the 2022-23 fiscal year.
He also said the country was not planning any renegotiations with the International Monetary Fund (IMF) and would fulfill its obligations with the global lender.
Last month, Prime Minister Shehbaz Sharif appealed to the Paris Club for a debt moratorium after the country’s already struggling economy was hit by devastating floods which the government says will lead to economic losses. up to $30 billion.
Nearly 33 million people have been affected and 7.9 million displaced in recent floods caused by heavy monsoon rains in Pakistan.
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)
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