Pakistan will ‘absolutely not’ default on debts despite floods, finance minister says

The finance minister says that the economy has lost at least $18 billion after the floods, which could go up to $30 billion.
Miftah says that despite the disaster, most stabilization policies and goals were still on track.
Miftah says that about $5 billion in investments from Qatar, the United Arab Emirates and Saudi Arabia will be completed this fiscal year.

ISLAMABAD: Pakistan will “absolutely not” default. Debt Obligations Despite the devastating floods, the finance minister said on Sunday, signaling there would be no major deviation from reforms designed to stabilize the struggling economy.

Floods have affected. 33 million Pakistanis, caused billions of dollars in damage, and killed more than 1,500 people – raising concerns that Pakistan would default on the debt.

“Given the challenging environment, the path to stability was narrow, and it is still narrow,” Finance Minister Miftah Ismail told Reuters in his office.

“But if we continue to make sensible decisions – and we will – we will not be defaulted. Absolutely not.”

Thanks to tough policy decisions, Pakistan was able to get the International Monetary Fund (IMF) program back on track after several months of delay. But the positive sentiment was short-lived before that. Devastating rains.

Despite the disaster, Ismail said most stabilization policies and goals are still on track, including boosting dwindling foreign exchange reserves.

Despite an influx of $1.12 billion in IMF funding at the end of August, the central bank’s reserves stood at $8.6 billion, just enough for one month of imports. Last year’s target was to increase the buffer to 2.2 months.

He said Pakistan would still be able to build up reserves by $4 billion, even if more imports like cotton from the floods hit the current account balance by $4 billion and adversely affect exports.

However, they estimated that the current account deficit would not exceed $2 billion after the flood.

“Yes, the very poor have suffered a lot and their lives will never be whole again. But in terms of servicing our external and domestic debt and being micro-macro-economically stable, those things are under control. “

He said global markets are “angry” about Pakistan, as the economy has suffered losses of at least $18 billion, which could go as high as $30 billion, after the floods.

“Yes, our risk of credit default has increased, our bond prices have fallen. But, I think within 15 to 20 days, the market will return to normal, and I think Pakistan is determined to be prudent. Is.”

Pakistan’s next big payment – $1 billion in international bonds – is due in December, and Ismail said the payment would be “absolutely” complete.

gave The IMF said said on Sunday that it will work with the international community to support Pakistan’s relief and reconstruction efforts and efforts to ensure sustainability and stability.

Ismail said external financing sources were secured, including more than $4 billion from the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank and the World Bank.

This includes $1.5 billion from ADB next month under the Countercyclical Support Facility – a budget support instrument.

The minister also said that in the current fiscal year, investments of around $5 billion will be made from Qatar, UAE and Saudi Arabia.

All three announced interest in investing in Pakistan earlier this year, but no timeline or precise plans have yet been reported.

He said the $1 billion investment in the UAE would “definitely” come in the form of purchases in the Pakistan stock market in the next few months.

He added that around $3 billion in Qatari investment commitments will be reached within the fiscal year to June 2023.

“They are looking at long-term leases of three airports in Pakistan, Karachi, Lahore and Islamabad. They are also looking at buying two LNG (liquefied natural gas) plants which I think might be It will be in the calendar year,” he said.

He said that if the figure of 3 billion dollars could not be reached at the end of the financial year, the remaining amount would go to the stock market.

He also said that Crown Prince of Saudi Arabia The prime minister had assured Shahbaz Sharif that Riyadh would invest one billion dollars before December.

The Central Bank of Pakistan announced on Sunday that Saudi Arabia’s Development Authority has also extended a one-year extension of $3 billion in deposits due in December.

He said a legal document would soon be signed with a “friendly country” to activate a $1 billion deferred payment facility for oil.