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Saturday February 04, 2023

No default: Ishaq Dar says current account deficit going down

Ishaq Dar ruled out default, stating Pakistan had never defaulted and would repay all its outstanding obligations for the ongoing financial year well on time

November 20, 2022
Finance minister Ishaq Dar delivering a televised statement. Screengrab of a Twitter video.
Finance minister Ishaq Dar delivering a televised statement. Screengrab of a Twitter video.

ISLAMABAD: Federal Finance Minister Ishaq Dar on Saturday ruled out default, stating Pakistan had never defaulted and would repay all its outstanding obligations for the ongoing financial year well on time.

He said that certain elements with nefarious designs and vested political interests were spreading rumours. He appealed to political leaders to shun politics in the larger interest of the national economy.

In a televised statement on Saturday, Minister for Finance Ishaq Dar said that some irresponsible and unverified reports were being circulated apparently for vested political interests but they resulted in causing a negative impact on international financial institutions and bilateral creditors who were dealing with Pakistan.

He said that it was being spread massively on social media that Pakistan would not be able to pay back its Islamic Sukuk bond worth $1 billion in the first week of December 2022. “We had never defaulted on paying our international obligations barring once in 1971 when the East Pakistan debacle related to a small transaction of one US insurance firm. This speculation has been spread massively and I categorically explained that this bond would be repaid on time and all coming obligations would be repaid well on time,” he added.

The minister said that all repayments of debt and obligations were being managed in principle and arrangements were in place, so no one should be worried about it.

Another rumour was about an increased risk of credit default swaps as Eurobond had small transactions which should not have any impact technically, however, the risk bar was shown rising towards on higher side by touching 75 percent. They had their own designs and their own formulas but Pakistan had never defaulted while the bar was shown rising towards the risky side. “For God’s sake, please stop such games (Tamasha) as this country belongs to you, me, and 230 million people and all political parties. Such irresponsible statements caused loss and it should be avoided,” he maintained. Without naming anyone, he deplored that those holding responsible positions spread such speculation.

He said that it was also speculated that there would be a shortage of petrol and diesel in the country in the coming few days. The country, he said, possessed sufficient stocks of POL products and there was nothing to worry about it. Such rumuors should be avoided because it caused panic among the masses. It also led to queries from international financial institutions and time was wasted in explaining the situation, he added. Fourthly, he said that it was being discussed that the current account deficit (CAD) had ballooned, raising fears that it would skyrocket and would become unmanageable. It’s contrary to the fact as the CAD was being reviewed and managed carefully in the best interest of the country. The CAD stood at $316 million in September 2022 and it was less than $400 million in October 2022, so overall it would be hovering around $5 to $6 billion for the current fiscal against an initial projection of $12 billion. “We appeal to the nation that Pakistan comes first, so political affiliations come afterward. The economy of Pakistan should come first irrespective of the political divide. Everything is in order, so no need to create panic,” he concluded.

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