Former finance minister Miftah Ismail believes Pakistan is headed for default and urged the government to take action.
Miftah, during an interview with the private tv channel Geo News’ show ‘Aaj Shahzeb Khanzada Kay Saath,’ remarked, “Pakistan shouldn’t default, but the route we’re on could lead us there as the risk rises. So we should take precautions to avert the default possibility.”
The ex-minister said the threat of default will keep looming over Pakistan until the government completes the ninth review of the International Monetary Fund (IMF).
“Pakistan is in peril; it’s back in jeopardy, and as long as IMF isn’t back on the table, the prospect of default will stay strong,” Miftah added.
The State Bank of Pakistan (SBP) paid $1 billion for a Sukuk bond this month, ending Pakistan’s imminent default danger.
The foreign exchange reserves fell 10.45% to $6,714.9 million on December 2, a four-year low.
In the first quarter of the fiscal year 2022 -2023, the budget deficit reached 1% of GDP, above the IMF’s 0.7% target.
Senator Ishaq Dar of Miftah’s party said Pakistan will not default since it was on the right track.
Officials said that Pakistan is set to obtain a multibillion-dollar financial rescue package from long-time ally Saudi Arabia this month. The country’s eighth assessment of a $7 billion IMF bailout ran into problems.
Two finance ministry officials said the Saudi package will include deposits and deferred oil payments.
God willing, Saudi Arabia will provide us with $4 billion this month, a top official told Reuters.
Since September’s IMF evaluation, Pakistan has been scrambling to seek funds to meet external payment obligations.
Dar said he expected $3 billion from a friendly country before the review.
Dar said it was “unique” because Islamabad had already met all the standards.
The IMF wants Pakistan to explain how it would pay for the flood’s rebuilding and rehabilitation, which caused over $30 billion in damages this summer.
The government and IMF said online reviews continued. However, IMF’s physical review hasn’t been scheduled.
The IMF cleared Pakistan’s seventh and eighth reviews in August, releasing approximately $1.1 billion.
Pakistan received a $6 billion bailout in 2019, plus $1 billion this year.
