Finance Minister Ishaq Dar told Reuters on Friday that he will seek rescheduling of some $27 billion worth of non-Paris Club debt largely owed to China, but will not pursue haircuts as part of any restructuring.
In an interview, Dar ruled out the possibility of a default on Pakistan’s debt, an extension of the maturity date on bonds due in December or a renegotiation of Pakistan’s current International Monetary Fund (IMF) programme.
The veteran finance minister said multilateral development banks and international donors have been “quite flexible” with ways to meet Pakistan’s external financing needs estimated at about $32bn after devastating floods.
Some of this may come from reallocating funds from previously approved, slower-disbursing development loans, he added.
Dar, who is participating in the IMF and World Bank annual meetings just over two weeks after taking office, said that Pakistan will seek restructuring on equal terms for all bilateral creditors.
He declined to comment when asked whether he thought it would be difficult to persuade China, creditor for about $23bn of the debt, to participate.
But asked whether Pakistan would seek to reduce debt principal, he said “rescheduling is fine, but we are not seeking a haircut. That’s not fair.”
Dar, who served as finance minister three previous times — most recently from 2013 to 2017 — is known as a staunch defender of the rupee. He said Pakistan has not engaged in physical intervention in the currency, which has been battered this year by a strong US dollar, but which has rallied some 10 per cent since his appointment.
Dar said that he views the “true value” of the rupee at a level under 200 to the dollar. It last traded at 219.
“I am for a stable currency, I am for a realistic rate. I am for market-based, but not subject to a currency being taken hostage and making speculators billions of dollars.”
Asked whether he discussed with IMF officials the possibility of borrowing from the Fund’s new Resilience and Sustainability Trust for middle-income countries, Dar said “We have discussed all options.”
The finance minister added that the IMF’s new emergency “food shock” borrowing window may also be a good fit for the country, which has lost crops due to devastating floods and may need to import up to half million tons of wheat in the next year.
“In this scenario, we have the possibility of approaching and accessing this facility,” he said.
Meetings with officials
Separately, the minister held multiple meetings with officials of the IMF, World Bank, Saudi Arabia, the United Kingdom and the United States.
In one of a series of press releases, the finance ministry stated that Dar led Pakistan’s delegation on a high-level round table discussion on the recent floods which was co-chaired by World Bank Vice President Martin Raiser and UK PM’s SREP for Afghanistan and Pakistan Nigel Casey.
The round table was attended by all major bilateral and multilateral development partners and donors. “Initial findings of Pakistan’s post-disaster need assessment jointly prepared by the World Bank, Asian Development Bank, UNDP, EU and the Government of Pakistan were presented in the round table.
“In his concluding remarks, finance minister emphasied the need to provide adequate support to Pakistan to meet the challenges of recovery and rehabilitation,” the press release stated.
Dar also met Director of the Middle East and Central Asia Department at the IMF, Jihad Azour, and discussed the implementation of the ongoing programme. For his part, Azour assured the finance minister of the fund’s support.
US Assistant Secretaries Ramin Toloui and Donald Lu called on Dar at the Pakistan Embassy to express solidarity with Pakistan over devastating floods and assure continued US support for Pakistan’s relief and recovery efforts.
Other mutual interests were also discussed, the finance ministry’s press release added.
In his meeting with Saudi Development Fund CEO Sultan Abdul Rehman Al Murshid, Dar conveyed Pakistan’s “deep gratitude” for Saudi Arabia’s support to Pakistan at all times and welcomes the SFD team’s upcoming visit to Pakistan. Murshid assured Dar of the SFD’s continued support.
Dar also met UK Minister of State for Development in the Foreign, Commonwealth & Development Office Vicky Ford and thanked her country for its financial support and assistance to meet the challenges posed by floods.
The finance minister also appreciated the trade concessions afforded to Pakistan and other developing countries under the DCTS Scheme.
The two sides discussed ways to further deepen bilateral development cooperation, the finance ministry said.