WASHINGTON: Pakistan’s new finance minister, Ishaq Dar, told JEE News on Friday that he would try to restructure nearly $27 billion worth of non-Paris Club debt owed mostly to China, but Will not attempt a haircut as part of any restructuring.
In an interview, Dar ruled out a default on Pakistan’s debt, an extension of the December bond maturity date or a renegotiation of Pakistan’s existing International Monetary Fund program.
The veteran finance minister said multilateral development banks and international donors have been “flexible enough” to meet Pakistan’s external financing needs after the devastating floods. Some of this could come from reallocating funds from pre-approved, slowly disbursing development loans, he added.
Dar, who is attending the annual meetings of the IMF and the World Bank just two weeks after taking office, said Pakistan is seeking restructuring on equal terms for all bilateral creditors.
He declined to comment when asked if he thought it would be difficult to convince China, the lender of about $23 billion, to participate.
But asked if Pakistan would try to reduce the principal amount of the debt, he said, “Rescheduling is fine, but we are not trying to take a haircut. It is not appropriate.”
Rupee Defender
Dar, who has been Pakistan’s finance minister three times – most recently from 2013 to 2017 – is known as a staunch defender of the rupee. He said Pakistan has not physically intervened in the currency, which has been hit by a strong US dollar this year, but has appreciated about 10 percent since his appointment.
Dar said he sees the “real value” of the rupee at a level below 200 against the dollar. It last traded at 219.
“I’m for a stable currency, I’m for a realistic rate. I’m market-oriented, but not subject to a currency being held hostage” and making speculators billions of dollars.
Borrowing Options
Asked if he had discussed with IMF officials the possibility of borrowing from the fund’s new Resilience and Sustainability Trust for middle-income countries, Dar said we have discussed all options. .
Pakistan’s finance minister added that the IMF’s new emergency “food shock” borrowing window could also prove useful for the country, which has suffered crop losses due to devastating floods and is looking to refinance its debt in the next few months. Up to half a million tonnes of wheat may need to be imported. The year
“In this scenario, we have the possibility to reach and access the facility,” he said.
