Dar dismisses default possibility

Pakistan’s Finance Minister, Ishaq Dar, has assured the nation that it is not on the brink of a financial crisis and will not default on its financial obligations. Dar’s remarks come amidst concerns of a potential default due to declining remittances, foreign exchange reserves, and the delay in reaching an agreement with the International Monetary Fund (IMF) for a $1.1 billion tranche from a $6.5 billion loan package.

Speaking at a gathering in Islamabad, Dar commended his economic team for their dedication and highlighted Pakistan’s achievement of a current account surplus of $750 million in March and $18 million in April.

Regarding the ongoing negotiations with the IMF, Dar confirmed that his team has completed the necessary technical work and prior actions for the successful completion of the ninth review. He expressed disappointment with the delay, acknowledging that the review should have been concluded earlier.

Dar revealed that Pakistan has already repaid $5.5 billion of its commercial loans. China has rolled over $2 billion after recognizing Pakistan’s fulfillment of IMF’s requirements. Dar expressed optimism that a substantial portion of the remaining $3.5 billion owed to non-Chinese commercial banks would be returned once the IMF’s staff-level agreement or board meeting is completed.

The delay in reaching an agreement with the IMF has been ongoing since November, making it the longest gap in staff-level missions since 2008. The IMF recently stated that Pakistan needs significant additional financing to successfully conclude the ninth review of the bailout package. Approval of the pending bailout funds is crucial for Pakistan to address the balance of payments crisis. In March and April, Pakistan received pledges of assistance from the United Arab Emirates, Saudi Arabia, and China to mitigate the funding deficit.