Pakistan seeks $27bn debt restructuring by bilateral debt finance minister

WASHINGTON, Oct 14 (Reuters) – Pakistan’s new Finance Minister Ishaq Dar told Reuters on Friday that he would seek a debt restructuring of around $27 billion outside the Paris Club, mostly owed to China but none Debt haircuts will be pursued as part of restructuring.

In an interview, Dar ruled out the possibility of a default on Pakistan’s debt, an extension of the maturity date of bonds maturing in December, or a renegotiation of Pakistan’s current International Monetary Fund program.

The veteran finance minister said multilateral development banks and international donors have been “fairly flexible” in meeting Pakistan’s external financing needs, estimated at about $32 billion following devastating floods. Some of that could come from reallocating funds from previously approved, slower-paying development loans, he added.

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Dar, who is attending the annual meetings of the IMF and World Bank a little over two weeks after taking office, said Pakistan will seek a restructuring on equal terms for all bilateral creditors.

He declined to comment when asked if he thought it would be difficult to persuade China, lenders of around $23 billion of the debt, to participate.

But when asked if Pakistan would try to reduce debt, he said: “Debt restructuring is fine, but we are not looking for a haircut. That’s not fair.”

RUPEE DEFENDERS

Dar, who previously served as Pakistan’s finance minister three 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 by a strong US dollar this year but has risen about 10% since his appointment.

Dar said he was looking at the “true value” of the rupee at levels below $200. It was last traded at 219.

“I’m for a stable currency, I’m for a realistic rate. I’m for a market-based currency, but I’m not for holding a currency hostage” and making billions of dollars for speculators.

RENTAL POSSIBILITIES

When asked if he had spoken to IMF officials about the possibility of borrowing from the fund’s new Resilience and Sustainability Trust for middle-income countries, Dar said, “We’ve discussed all the options.”

Pakistan’s finance minister added that the IMF’s new “food shock” emergency lending window could also work well for the country, which has lost crops due to devastating floods and may need to import up to half a million tons of wheat over the next year.

“In this scenario, we have the opportunity to approach and access this facility,” he said.

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Reporting by David Lawder; Edited by Sandra Painter

Our standards: The Thomson Reuters Trust Principles.

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