Federal Minister for Finance and Revenue Ishaq Dar has said that approaching the Paris Club for debt relief would be “his last priority” as the move would not be in the interest of Pakistan.
Talking to Geo News program 'Aaj Shahzeb Khanzada Ke Saath' on Friday, Dar shared that Moody’s Investors Service had a number of concerns behind its decision to cut Pakistan’s sovereign credit rating to Caa1 from B3.
They have doubts that “Pakistan is going to the Paris Club for the restructuring of its debt. This has a very serious negative effect on the ratings of a country,” said Dar.
“Moreover, the biggest factor [behind the downgrade] is the consequential losses due to floods. They [Moody’s] believe that Pakistan would not be able to meet its external obligations on time,” he said.
On Thursday, Moody’s downgraded the government of Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa1 from B3. It also downgraded the rating for the senior unsecured MTN programme to (P) Caa1 from (P) B3.
“Going to Paris Club would be my last priority, as this is not in the interest of the country,” said the finance minister.
“We want to conduct business. When one approaches the Paris Club others become reluctant to do business with it,” he added.
The statement comes after Prime Minister Shehbaz Sharif last month made an urgent appeal to international donors and rich countries for debt relief and special programmes for the rehabilitation of flood-affected people of the country.
“We have spoken to European leaders and other leaders to help us in the Paris Club to get us moratorium,” Sharif said with Bloomberg Television in New York, in the interview, referring to the group of rich creditor nations.
“Unless we get substantial relief how can the world expect us to stand on our own feet? It is simply impossible,” the prime minister said then.
Meanwhile, on currency volatility, Dar while not naming anyone informed that a number of financial institutions were involved in currency manipulation.
“A number of banks, institutions and people raked in billions of rupees through currency manipulation. However, due to this, the economy suffered as the country’s external debt increased by trillions without taking a single penny,” he said.
Dar said Pakistan’s rupee's real value is below 200. “However, since the news of my arrival PKR has been regaining strength and is moving towards its true value,” said the finance minister.
Dar said that Pakistan has to pay external liabilities of $22 billion in the coming 12 months. “Our projected current account deficit is around $12-13 billion, so we have to arrange to finance around $34-35 billion dollars in a year. God willing, it will be arranged,” he added