19.09.2022, 14:29
Pakistan FM Confident of Averting Debt Default Despite Flood-Induced Economic Pressure
Source: OREANDA-NEWS
OREANDA-NEWS Pakistan will "absolutely not" default on its foreign debt obligations despite the devastation caused by months-long flooding, Finance Minister Miftah Ismail told Reuters in an interview.The minister, who successfully secured an IMF bailout package in August, said that the Pakistani government would continue to focus on reforms designed to stabilize the economy.The IMF earlier approved a long-awaited $1.17 billion bailout package for Pakistan.
The country's foreign exchange reserves currently sit around $8.6 billion, enough to cover the cost of the country's imports for fewer than 40 days.The Sharif government has reduced fuel subsidies by increasing prices at an unprecedented level, a measure facing stiff resistance from former PM Imran Khan's PTI.
Ismail hopes that Pakistan will add at least $4 billion in forex reserves despite rising pressure on the current account balance due to the possible rise in the quantity of food and cotton imports, among others.Agriculture-dominated exports are also facing immense pressure as floods destroyed crops in the provinces of Sindh, eastern Punjab and Balochistan, the region known as the country's food basket.The minister acknowledged investors' "jittery" sentiments about Pakistan, given the economy has suffered at least $18 billion in losses due to floods, a figure which may rise as high as $30 billion.Yields on Pakistan's five-year Sukuk - shariah-compliant bonds maturing in December 2022 - collapsed by a whopping 39 percent last week, indicating a massive slide in investor confidence in the economy despite the revival of the International Monetary Fund (IMF) bailout package.According to Ismail, external financing sources were secured, including over $4 billion from the Asian Development Bank (ADB), Asian Infrastructure Investment Bank, and the World Bank.Meanwhile, Saudi Arabia has provided massive relief to the government as it rolled over a $3 billion debt for one year on the existing terms.
The country's foreign exchange reserves currently sit around $8.6 billion, enough to cover the cost of the country's imports for fewer than 40 days.The Sharif government has reduced fuel subsidies by increasing prices at an unprecedented level, a measure facing stiff resistance from former PM Imran Khan's PTI.
Ismail hopes that Pakistan will add at least $4 billion in forex reserves despite rising pressure on the current account balance due to the possible rise in the quantity of food and cotton imports, among others.Agriculture-dominated exports are also facing immense pressure as floods destroyed crops in the provinces of Sindh, eastern Punjab and Balochistan, the region known as the country's food basket.The minister acknowledged investors' "jittery" sentiments about Pakistan, given the economy has suffered at least $18 billion in losses due to floods, a figure which may rise as high as $30 billion.Yields on Pakistan's five-year Sukuk - shariah-compliant bonds maturing in December 2022 - collapsed by a whopping 39 percent last week, indicating a massive slide in investor confidence in the economy despite the revival of the International Monetary Fund (IMF) bailout package.According to Ismail, external financing sources were secured, including over $4 billion from the Asian Development Bank (ADB), Asian Infrastructure Investment Bank, and the World Bank.Meanwhile, Saudi Arabia has provided massive relief to the government as it rolled over a $3 billion debt for one year on the existing terms.
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