ANI Photo | Pakistan’s default risk increases sharply amid uncertainty about talks with IMF

Pakistan’s default risk has increased sharply amid political turmoil and uncertainty about talks with the International Monetary Fund (IMF), reported Dwan.
The country’s default risk was measured by five-year credit-default swaps (CDS), insurance contracts that protect an investor against a default, Dawn reported
The credit-default swaps increased and reached 75.5 per cent on Wednesday from 56.2 per cent, Dawn cited data circulated by research firm Arif Habib limited. The increase in the CDS shows a ‘grave situation’ making it extremely difficult for the government to raise foreign exchange from markets through bonds or commercial borrowings.
Pakistan needs USD 32 billion to USD 34 billion this fiscal year to meet its foreign obligations. According to financial experts, Pakistan still requires about USD 23 billion in the remaining fiscal year. Notably, Pakistan continues to remain in the IMF programme which allows it to get inflows from the World Bank, Asian Development Bank and Asian Infrastructure Bank, as per the Dawn report.
Although Pakistan had told IMF that it would reduce the fiscal deficit by Rs 1500 billion in the current fiscal year. However, the situation is worsening as the deficit increases in the first quarter. Officials sources in the United States last week said that the talks between Pakistan and IMF have been rescheduled.

The talks between IMF and Pakistan government due to begin in early November have been postponed until the third week of November, Dawn reported. The talks will resume after Pakistan works on its commitment to adjust sales tax on petroleum products and takes other measures needed under a loan agreement revived earlier this year.
Officials sources, who spoke to Dawn, revealed that the talks between IMF and Pakistan were rescheduled after World Bank’s report on flood damages in Pakistan which was released in October. Pakistan is due to pay USD 1 billion on December 5 against the maturity of five-year Sukuk, or Islamic bonds.
Despite Pakistan’s finance minister Ishaq Dar’s repeated assurances for Sukuk payment, the international market is not willing to trust the assurances as the nation’s economy struggles to avoid default by borrowing more from the markets, donors, commercial banks and friendly nations.
The financial sector has stated that the Fund was calling for new taxes to increase liquidity and avoid fiscal deficit expansion. The government needs at least Rs 800 billion, which as per the report could be achieved through new taxes which could be difficult for the government amid the economic situation and political turmoil.
Pakistan has been gripped by political turmoil since Imran Khan was removed from office through a vote of confidence in April. Pakistan Tehreek-e-Insaf Chief Imran Khan accused the United States of planning his ouster.
After Khan’s ouster, PML-N President Shehbaz Sharif was elected as Pakistan’s Prime Minister after 174 lawmakers voted in his favour while Pakistan Tehreek-i-Insaf members of the National Assembly boycotted the election, as per the report.
In October, the Election Commission of Pakistan (ECP), in its verdict in the Toshakhana case, disqualified Khan and said that he is no longer a Member of the National Assembly, Geo News reported. According to the ECP, Khan had filed a false affidavit and was found involved in corrupt practices. (ANI)

This report is filed by ANI news service. TheNewsMill holds no responsibility for this content.

Subscribe to our Newsletter


ANI News Logo
About ANI

-

ANI is a leading multimedia news agency.

Previous

Ravi Shastri not in favour of Indian players playing in overseas leagues

Odisha to strengthen help desks in govt medical colleges, hospitals

Next