Pakistan Finance Minister Ishaq Dar Moves To Secure Rescheduling Of $27 Billion In Bilateral Debt

Pakistan is seeking rescheduling of bilateral debt of around USD 27 billion with different countries, the Finance Minister has said.
    
“Rescheduling of bilateral debt is fine,” Finance Minister Ishaq Dar said on Monday while ruling out rescheduling of international debt from wealthy western nations under Paris Club, multilateral and international sovereign bonds.
    
The minister said there was no point in Paris Club rescheduling debt because the overall debt to these creditors was no more than 11 per cent of total foreign debt and debt relief over the year would be less than USD 1.2bn, Dawn newspaper reported.
    
Pakistan owes Paris Club countries a combined sum of around USD 10.7bn. “When we are going to arrange USD 32-34bn for external payments, another USD 1.2bn is no big issue,” Dar said.
    
The repayments involve about USD 22bn worth of foreign debt servicing and about USD 10-12bn of current account deficit.
    
As of September 30, the State Bank of Pakistan’s (SBP) foreign exchange reserves stood at USD 7.89bn while the country’s total foreign exchange reserves are reported at USD 13.6bn, including USD 5.69bn of commercial bank stocks.
    
According to the International Monetary Fund (IMF), Pakistan’s total non-Paris Club bilateral debt currently stands at about USD 27bn, of which Chinese debt is about USD 23bn.
    
The US and the IMF have been insisting on the renegotiation of power purchase agreements with China to secure fiscal space in foreign payments. Non-Paris Club members generally include China, Saudi Arabia and other Middle Eastern states.
    
Before his weeklong visit to the US to attend annual meetings of the World Bank and IMF besides other important engagements, the minister reaffirmed Pakistan’s commitment to complete the IMF programme with all its conditions in an honourable manner and meet all repayment obligations to multilateral, bondholders and Paris Club creditors.
    
He said the ninth review with the IMF was scheduled for October 25 and ruled out any consideration for renegotiating the IMF agreement when it was in the last leg of its completion.
    
The minister also conceded that conditions were not favourable for the launch of a USD 2bn international bonds, budgeted for the current fiscal year, although authorities were planning foreign visits for the purpose.
    
“I cancelled the itinerary. We can’t issue a bond at this stage,” he said, adding that his priority would be to improve indicators over the next five to six months through hard work and then think about that. 
    
To make up for the gap, he said, the government would work hard and find alternative sources. Responding to a question, he said the completion of the Fund programme with success and ease in the rate of inflation, particularly in energy prices, would bring about a feel-good sense if the government was able to make the people comfortable.
    
Dar said the IMF programme had only six to seven months to go and he wished its successful completion with honour and dignity it would be the second Fund programme that reached its logical end and both while he led the country’s economic team. He recalled that within days after coming to power in 2013, the PML-N had signed an IMF programme and completed it successfully in 2016.
    
The minister made it clear that the government would not approach the Paris Club or multilateral for the rescheduling of foreign loans nor extend the date of maturity of international bonds. “Pakistan is an independent and sovereign state and we have to maintain its name, dignity and honour,” he said, adding that the government would have to work hard to ensure all repayments and on time.
    
The minister now heads to Washington, where central bankers, ministers, private sector executives and people from other walks of life will discuss ways to tackle rising global challenges, according to Dawn.