Pakistan out of economic vulnerability phase: Finance Minister Dar

Pakistan's Finance Minister Ishaq Dar on Saturday declared that the country was out of the economic vulnerability phase and the government would make payments to multilateral lenders on time while seeking bilateral debt restructuring.

Addressing the post-budget press conference in Islamabad, a day after unveiling the Rs 14.46 trillion budget for the 2023-24 fiscal year beginning from July 1, Dar said there were no plans to approach multilateral or development institutions to request debt rescheduling.

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“As far as Paris Club rescheduling, we have no such plan on our menu. We will not go for rescheduling multilateral debt. We will make the payments on time and when they become due. I don’t think it is a dignified way to go and tell them that we cannot pay,” he said.

Dar said negotiations could be pursued with bilateral lenders for extending the repayment period, which existed as an option and could be explored after the budget process.

“Backloading the principal and focusing on debt servicing could be considered for bilateral debt rescheduling,” he said.

Dar also clarified that there was no issue with the domestic debt, and the government would not go for its rescheduling.

The minister admitted that the country faced deep and steep economic vulnerability but added that the government successfully overcame it and prevented further economic decline.

Adding that the country would be put back on the road to progress, Dar said the first objective would be to reach the 2017 economic indicators when Pakistan become the 24th economy in the world.

The minister also defended that the declared GDP target of 3.5 per cent growth would be achieved and added that the focus was on agriculture, IT and small and medium-sized industry.

Talking about the International Monetary Fund (IMF), he hoped that the Washington-based donor would complete the process of the ninth and tenth review of the $6.5 billion stalled loan package and release funds, but insisted that alternative options were available.

Cash-strapped Pakistan is awaiting a much-needed $1.1 billion tranche of funding from IMF, which was originally due to be disbursed in November last year.

The funds are part of a $6.5 billion bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations.

The IMF has insisted that the government should meet tough conditions before releasing $1.1 billion.

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There is growing consensus among the experts that without a revival of the IMF programme or a new bailout package in the next fiscal year, Pakistan will find it almost impossible to ward off default.

Dar also said that the total current expenditure was Rs 13.3 trillion, 53 per cent higher than last year, and includes subsidies for nearly a dozen sectors.

The economic situation has never been so grim in a country, which, since independence, has thrice seen military coups and the ouster of elected governments.

Cash-strapped Pakistan’s economy has been in a free fall mode for the last many years, bringing untold pressure on the poor masses in the form of unchecked inflation, making it almost impossible for a vast number of people to make ends meet.

Their woes increased manifold after last year’s catastrophic floods that killed more than 1,700 people and caused massive economic losses.