Islamabad: Finance Minister Ishaq Dar on Sunday said that the government was not planning to seek debt restructuring from the Paris Club creditor nations.
Moody’s Investor Service on Wednesday last week cut Pakistan’s sovereign credit rating by one notch to Caa1 from B3, citing increased government liquidity and external vulnerability risks following the devastating floods that hit the country.
“The decision to downgrade the ratings to Caa1 is driven by increased government liquidity and external vulnerability risks and higher debt sustainability risks, in the aftermath of devastating floods that hit the country since June 2022. The floods have exacerbated Pakistan’s liquidity and external credit weaknesses and vastly increased social spending needs, while government revenue is severely hit,” Moody’s said in a statement.
However, Finance Minister Ishaq Dar, while addressing a press conference on Sunday, said that the government has decided not to go to the Paris Club.
“We have decided not to go to the Paris Club,” Dar said, adding that in consultation with Prime Minister Shehbaz Sharif, it was decided that it was not in the country’s interest to seek a debt restructuring.
While addressing rumors that the government might extend bond maturities, Ishaq Dar said the country would fulfill all multilateral, international, and bond obligations.
“We will pay the bonds on time,” Ishaq Dar said.
Last month, PM Shehbaz made an appeal to the Paris Club for debt abeyance after the country was hit by devastating floods that the government estimates will cause economic losses of up to $30bn.
