ISLAMABAD: Federal Minister for Finance and Revenue Ishaq Dar on Saturday rejected all speculations about oil shortage and expansion of credit default swaps, terming them as “baseless rumours, spread for political purposes”.
Addressing a press conference via video link, the finance minister asserted that Pakistan would “absolutely not” default on its debt obligations.
The country’s next big payment — $1 billion in international bonds — is due in December, and Dar assured people that the payment would be made on time.
“We’ve never defaulted before. We’re not even going to be close to defaulting … Let me make it very clear that the bond will be paid and there will be no delays and even payments coming next year. Arrangements have been made in the principal for that,” he reiterated.
‘People Should Refrain from Rumors of Increasing Danger’
Addressing the issue of widening the credit loss exchange, Dar urged people not to spread “unconfirmed rumours” about the risk factor.
Pakistan’s default risk as measured by five-year credit default swaps (CDS) – insurance contracts that protect investors against default – rose by 1,929 basis points (bps) to 7,550bps on November 17, research firm Arif said. According to data provided by HABIB LIMITED
Pakistan is scheduled to pay $1 billion on December 5 against the maturity of five-year sukuk or Islamic bonds.
The finance minister has repeatedly assured the repayment of sukuk but the international market is unwilling to trust the assurances as the country’s economy struggles to avoid default by borrowing more from markets, donors, commercial banks and friendly countries.
The recent rise in CDS reflects a dire situation, making it increasingly difficult for the government to raise foreign exchange from the markets through bonds or commercial loans.
However, addressing all these news, Dar said: “Our international bonds have very little transactions and technically there should be no impact on them.”
The finance minister said people should avoid speculating about the escalating threat, saying such “irresponsible statements” would harm the country and should be avoided.
‘Sufficient oil Reserves’
Commenting on the third issue that has become a cause for concern, the finance minister said that Pakistan has sufficient fuel reserves to meet domestic demand.
“There is nothing like that. Reserves are at the level they should be and there is no need to worry,” Dar clarified.
Earlier in the week, the Oil and Regulatory Authority (Ogra) – in a brief statement – had revealed that the country has enough reserves of petrol and high-speed diesel for 22 days and 19 days respectively.
The regulatory authority added that the stock was in addition to imports, and dismissed all reports of local refinery production demands, an oil crisis and a decline in reserves.
‘Hard look at Current Account Deficit’
The finance minister said that another rumor is being spread regarding widening the current account deficit. He said that it is being closely monitored and monitored for national interest.
Dar again stressed that people should refrain from spreading rumors about the economy and issue statements responsibly.
