Pakistan to ‘repay’ external debt on time

Pakistan will not default on its international obligations and the federal government will ensure timely external debt payments, Minister of State for Finance and Revenue Dr Aisha Ghaus Pasha said Thursday.

In conversation with journalists in Islamabad, the state minister added that there is “no chance” of Pakistan’s default as authorities were in talks with Saudi Arabia for a $3 billion loan and the same amount from $3 billion.

The minister’s comments came as — despite assurances from the government about the country’s finances — the situation remains gloomy and experts warn of an economic crunch ahead.

“We will also ensure that our foreign debt requirements are met,” the minister said, as Pakistan faces an uphill task of repaying the loans amid depleting forex reserves.

The foreign exchange reserves held by the State Bank of Pakistan (SCP) stood at $6.11 billion on December 22, 2022, against $10.8 billion in April 2022 when the coalition government regime took over the reins of power after ousting Imran Khan through the vote of no-confidence.

Amid a crisis-like situation, Pakistan will have to repay approximately $8.3 billion in the shape of external debt servicing over the next three months (Jan-March) of the current fiscal year.

The government is eyeing to pass the ninth review of the International Monetary Fund (IMF) to secure a $1.7 billion bailout package, but both sides have made no substantial headway in recent days.

In this regard, the minister said the money lender’s annual holidays were underway, but the Pakistani authorities were in contact with them over the Extended Fund Facility (EFF).

Pasha also said Minister for Finance and Revenue Senator Ishaq Dar would meet the Fund’s officials at the international donor’s conference in Geneva on January 9.

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The country aims to gather funds from global donors as cataclysmic floods had battered the nation and caused damages worth $30 billion despite Pakistan being one of the lowest carbon emitters.

“Maybe our friendly countries are waiting for the donors’ conference so they can help us [and provide loans],” Minister Planning and Development Ahsan Iqbal told media earlier this month.

In his address to investors at the Pakistan Stock Exchange (PSX) on Wednesday, FinMin Dar said that the country will not default but did admit that the economy was in a “tight position”.

“It’s been three months since I took charge and we listen every day that there is going to be a default. How will there be a default? There is no chance that Pakistan will default,” the finance minister assured the investors.

Dar assured that Pakistan would survive and is managing itself but conceded that the economy was in a “tight position”.

He added that the country does not have the $24 billion reserves that the Pakistan Muslim League-Nawaz (PML-N) left in 2016 but that was not his fault.

“The fault is in the system and we must ensure Pakistan goes forward,” said the finance minister.