File photo of Finance Minister Ishaq Dar, courtesy PID
Finance Minister Ishaq Dar on Friday told private broadcaster Geo News that the incumbent government is in talks with “friendly nations” to get its bilateral debts restructured as part of measures to restore fiscal solvency.
The country, per estimates, has to repay roughly $22 billion over the next year, despite having reserves of just $4 billion. An International Monetary Fund (IMF) bailout seen as key to reviving further financial support is stuck in deadlock, leaving the country with few options for revenue generation to both continue government functions and repay debts.
In an interview with journalist Shahzeb Khanzada after he tabled the federal budget for fiscal year 2023-24 in the National Assembly, Dar admitted that the government was working on debt restructuring—a longstanding demand of economists—adding that the aim was to rollover sovereign deposits “as they are every year.” However, he clarified, he was opposed to avoiding repayments of nominal amounts, such as Rs. 100 billion, stressing any money that was borrowed should be returned.
Explaining further, he said the country’s cash flow would improve if it was able to service its interest and stagger principal repayments. According to the proposed budget, the government has set Rs. 7.3 trillion for debt servicing out of a total outlay of Rs. 14.5 trillion. The “deficit” budget has reignited concerns over Pakistan’s balance-of-payments crisis.
Lamenting that IMF’s refusal to revive the stalled bailout—pending since November—the minister accused the global lender of being one of the main contributors of political instability in Pakistan. Describing the IMF’s behavior as “totally unfair,” he hoped the ninth review would be completed this month, unlocking the next tranche of the bailout before it expires on June 30. He also urged the media to raise this “unfairness” before the world, stressing the IMF should be questioned over its “unfair” attitude to Pakistan. He alleged Pakistan was being targeted due to “geopolitics,” but did not offer any further explanations, saying he could not talk about it on TV.
The finance minister also stressed the incumbent government had bridged the credibility gap created by the last government and taken measures such as devaluing the rupee but the IMF had still refused to conclude the 9th review, which he described as unreasonable.
Reiterating that the IMF’s refusal to ink a staff-level agreement despite Pakistan fulfilling all prior conditions was the result of the previous PTI-led government’s actions, he said the global lender should trust the country and not try to pressure it. “Our first priority was not to let the country default,” he said, regretting this had required extraordinary measures that hampered imports and large-scale manufacturing.
To a question on how Pakistan could secure additional funding if it had failed to even convince friendly nations to lend it $2 billion to satisfy the IMF, Dar claimed the lender had offered to hold joint talks with countries like Saudi Arabia and the U.A.E. to unlock the funding. Pakistan, he claimed, had said it did not need the IMF’s “hand-holding” and would hold any bilateral talks itself.