Pakistan ‘absolutely will not default’, says Dar

Finance Minister Ishaq Dar said on Wednesday that the country was not on the brink of a financial crisis and would “absolutely not default.”

Dar’s comments come amid rising default fears, fueled by declining remittances from the country and foreign exchange reservesas well as a lengthy delay in reaching an agreement with the International Monetary Fund for the release of a $1.1 billion tranche of a $6.5 billion loan package.

Addressing the fears during a meeting at the Federal Board of Revenue in Islamabad, the finance minister praised his economic team for their “efforts and hard work”, noting that the country had posted a current account surplus during the months of March and April at $750 million and $18 million, respectively.

Regarding the ongoing negotiations with the IMF for the release of the long-awaited bailout tranche, Dar said that his team has completed all the technical work and prior actions required to complete the ninth review.

He stressed that there was a “sincere effort” on his part and his team to complete the IMF’s ongoing program, calling the delay “unfortunate.”

The review should have been completed earlier, he added.

Dar said the country had repaid $5.5 billion of its business loans. Of those, he said China had rolled over $2 billion once he “understood” that Pakistan had completed its requirements for the release of funds by the IMF.

Regarding the rest of the $3.5 billion from non-Chinese commercial banks, Dar said: “We hope that a substantial part of that (loan) line will be returned once the personnel-level agreement (IMF) is completed or the board meeting because it is always renewed and they (the banks) are always there to do business”.

Delay in agreement with IMF

TO staff level agreement to release a $1.1 billion tranche of a $6.5 billion IMF package has been delayed since November, with more than 100 days since the last staff-level mission to Pakistan. That is the longest gap since at least 2008.

The international money lender saying earlier this month that Pakistan needed a significant amount of additional funding to successfully complete the long-stalled ninth review of the IMF bailout package.

Obtaining commitments for “significant additional financing” is critical before the IMF approves the release of pending bailout funds that are crucial for the country to resolve an acute balance of payments crisis, he added.

So far, the United Arab Emirates, Saudi Arabia and China have come to Pakistan’s aid in March and April with promises that they would cover part of the funding gap.