FINANCE Minister Ishaq Dar has announced that Pakistan will not approach Paris Club – a group of major creditor
countries whose role is to find coordinated and sustained solutions to the payment difficulties experienced by debtor countries — for debt rescheduling amid Moody’s Investors Service’s decision to cut Pakistan’s sovereign credit rating to Caa1 from B3.
Addressing a press conference on Sunday, he declared that the incumbent government has made a conscious decision not to approach the Paris Club and pay off liabilities of multilateral lenders on time.
This as well as some other major announcements made by the Minister have sent a reassuring message to the business community at home and bilateral and multilateral donors, especially in the backdrop of downgrading of Pakistan’s credit rating by Moody’s recently.
The major reason behind this negative outlook was the speculations that Pakistan was planning to seek help from bilateral Paris Club creditors and it was understandable as the former Finance Minister Miftah Ismail openly stated that in the backdrop of natural disaster of floods, Pakistan will have to seek debt rescheduling from creditors including the Paris Club.
The new Finance Minister has not only responded to the concerns of the rating agency through a communication but also publicly stated that the country would not go to the Paris Club for debt rescheduling, which shows his confidence to meet international obligations in months to come.
Together with this, he has also announced, in consultation with the State Bank of Pakistan (SBP) to clear all Letters of Credit (LCs) up to $50,000, again a sign of trust in the ability of the country to meet reasonable foreign exchange requirements of the importers.
Dar further assured the markets that Pakistan’s next big payment — $1 billion in international bonds — which is due in December, would “absolutely be met on time.
” This would put to rest speculations that Pakistan was going to postpone the payment of international bonds due to financial constraints.
There is no doubt that the country was passing through a very difficult phase but Ishaq Dar has the demonstrated capability of overcoming challenges and the measures he has taken so far also bear testimony to this fact.
