ISLAMABAD: Federal Minister for Finance and Revenue Ishaq Dar Saturday rejected all speculations surrounding oil shortage and widening credit default swap, terming them “baseless rumours being spread on political goals”.
Addressing a press conference via video link, the finance minister asserted that Pakistan will “absolutely not” default on its debt obligations.
Country’s next big payment — $1 billion in international bonds — is due in December, and Dar assured the people that payment would be met on time.
“We have never defaulted before. We will not even be close to default … Let me clear this categorically that the bond will be paid and there is no delay in this and even arrangements have been made in principal for upcoming payments in the next year,” he reiterated.
Addressing the issue of widening credit deficit swap, Dar urged the people not to spread “unsubstantiated news” regarding the risk factor.
Pakistan’s default risk as measured by five-year credit-default swaps (CDS) — insurance contracts that protect an investor against a default — soared by 1,929 basis points (bps) to 7,550bps on November 17, according to data provided by research firm Arif Habib Limited.
Pakistan is scheduled to pay $1 billion on December 5 against the maturity of five-year Sukuk, or Islamic bonds. The finance minister has repeatedly assured Sukuk payment, but the international market is not ready to rely on assurances as the country’s economy struggles to avoid default by borrowing more from the markets, donors, commercial banks and friendly countries.
The recent increase in the CDS reflected a grave situation, making it increasingly difficult for the government to raise foreign exchange from markets either through bonds or commercial borrowings.
However, addressing all these news reports, Dar said: “Our international bonds have very small transactions and technically there should be no impact on them.”
The finance minister said that people should desist from speculation about increased risk, saying that such “irresponsible statements” would hurt the country and should be avoided.
