Pakistan won’t approach Paris Club for debt rescheduling, says Finance Minister

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Pakistan will not approach Paris Club – a group of wealthy creditor nations — for debt rescheduling amid Moody’s Investors Service’s decision to cut Pakistan’s sovereign credit rating to Caa1 from B3, announced Finance Minister Ishaq Dar on Sunday.

Addressing a press conference in the capital, Islamabad , he said the major reason behind the rating agency’s decision was concerns that Pakistan was seeking the rescheduling of $10 billion worth of debt owed to the Paris Club.
“We have made a very conscious decision that we will not approach Paris Club. We will manage our matters and we will pay off liabilities of multilateral lenders on time,” he said, adding that a strategy for paying back debts has been formulated.

The decision to not seek relief from Paris Club is in sharp contrast to Dar’s predecessor Miftah Ismail move of seeking debt rescheduling from the creditor nations in a bid to create breathing space in the midst of efforts to rehabilitate more than 33 million people affected by devastating floods.
“Given the climate-induced disaster in Pakistan, we are seeking debt relief from bilateral Paris Club creditors,” tweeted the then finance minister Miftah from New York last month.
Speaking about the speculations regarding bonds payments, Finance Minister Dar in Sunday’s media interaction denied the reports that Pakistan was going to postpone the payments for the international bonds.
He said Pakistan will make payments of bonds that are maturing in December this year.
Last month, the price of Pakistan’s US dollar-denominated global bonds – Eurobond and Sukuk – slumped while their yields skyrocketed at world markets after Prime Minister Shehbaz Sharif appealed for debt relief from rich nations to cope with the flood-hit economy.
The global bond investors interpreted the prime minister’s appeal as an indicator that the country was going to default on foreign debt repayments. Islamabad is scheduled to repay $1 billion against a maturing Sukuk on December 5, 2022.
Speaking about the IMF programme, the financial czar said the government had no intention of renegotiating an agreement with the global lender and pledged that the country will fulfil all its “sovereign commitments”.
Ishaq Dar said all Letters of Credit (LC) payments up to $50,000 will be released by the next month.

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