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| Minister of Finance Ishaq Dar's comments come amid concerns Pakistan might need to reschedule its Paris Club debt following massive floods |
Pakistan's finance minister attempted to allay concerns that the nation might have to reschedule its debt to the Paris Club in light of the devastating floods. He stated that the country is thinking about purchasing discounted oil from Russia.
Pakistan's sovereign rating was downgraded by one notch on October 6 by credit agency Moody's, citing increased liquidity and external vulnerability risks as a result of the floods' economic impact. The government strongly disagreed with this decision.
Pakistan's foreign reserves have decreased to approximately one month's worth of imports, primarily oil and gas purchases, according to economists. Pakistan will need to look into all options to increase and save its reserves.
Ishaq Dar, Pakistan's Finance Minister, stated to reporters when asked if the country might use cheap Russian oil:We are definitely thinking about it.We have the right to buy oil from Russia if India does so.
By December 5, when European Union sanctions prohibit seaborne imports of Russian crude, the Group of Seven richest economies has been attempting to impose a price-cap mechanism on Russian oil exports.
Dar stated on Wednesday that Pakistan would not seek a restructuring from that group of creditor nations and would not default. Prime Minister Shehbaz Sharif has requested debt relief from the Paris Club.
He told a conference in Islamabad, "We can meet our financial commitments, God willing."You need not be concerned, I can assure you.”
The floods, whose estimated economic impact is more than $30 billion, have further weakened Pakistan's economy, which is already in turmoil with a growing current account deficit, over 20% inflation, and a massive depreciation of the rupee.
Dar stated in an interview with Reuters last week that Pakistan will seek a restructuring of $27 billion in bilateral debt and that Pakistan will repay a $1 billion Eurobond that matures this year.
At the World Bank and International Monetary Fund annual meetings last week, he met with representatives of credit rating agencies and the US administration.
In the troubled South Asian nation, Dar is the latest in a long line of finance ministers.He took over for Miftah Ismail late last month, who was Pakistan's fifth finance minister in about four years but only served for six months.Dar, a seasoned politician and chartered accountant, has received this portfolio four times.