The Pakistan Business Council (PBC), one of the biggest corporate lobbying groups in Pakistan, has pushed the government to request debt forgiveness from China, the Paris Club, as well as other bilateral and multilateral lenders.
The proposal comes as Federal Minister for Finance and Revenue Ishaq Dar last year categorically stated that Pakistan will not seek debt restructuring from Paris Club creditor nations.
“We have decided not to go to Paris Club,” Dar said in October, adding that in consultation with Prime Minister Shehbaz Sharif it was decided that it wasn’t in the nation’s interest to ask for a restructuring.
“We will fulfil all sovereign (debt) commitments,” Dar said then.
The PBC stated that the country’s external debt servicing requirement for FY23 is $23 billion, of which $6 billion has been repaid and $4 billion rolled over, leaving $13 billion remaining to be funded, in its report titled “Macro-Economic Priorities,” which was released on Friday.
“(Moreover) There is further repayment obligation of $75 billion during FY24-26,” it said.
According to the PBC, the International Monetary Fund (IMF) program is essential for regaining the trust of friendly nations to offer aid. The PBC added that short-term rollovers will not be sufficient, “(but) in itself, it will not be sufficient to pay debt obligations unless they are considerably reformed, nor (will it) offer the opportunity to conduct major reforms.”
The business group requested the government to expedite or enhance the current IMF program by taking the impact of floods into account in order to guarantee liquidity immediately.
The IMF program is currently stalled at the level of the ninth review, with experts suggesting that Pakistan is reluctant to implement some of the lender’s conditions over their effect on political capital in a year when elections are scheduled to take place.
“Seek forgiveness of principal/interest on debt by China, Paris Club, bilateral and multilateral lenders,” said the PBC in its report.
