Miftah Ismail Sunday, the leader of the Pakistan Muslim League Nawaz (PMLN) and a former finance minister, warned that Pakistan’s default risk has risen to dangerous levels once more.
In an editorial piece published in Dawn, the former minister claimed that the risk would exist even after the December bonds were repaid.
At the risk of sounding the alarm, I must say that there is no room for error. According to the minister, there is an urgent need for concrete initiatives that reassure markets and lenders.
However, the former finance minister stated that the previous administration’s violation of the IMF agreement was what first led the country’s default risk to rise.
He said the rupee-to-dollar parity was left to the markets, and that there is currently a considerable and persistent difference between open market and interbank exchange rates. According to him, the disparity demonstrates that the central bank is providing banks with informal exchange rate guidance.
The PMLN leader went on to remark that the significant discrepancy between open market and interbank exchange rates hurts Pakistan’s exports and remittances, which also stimulates imports.
It is worth noting that the governor of the State Bank of Pakistan (SBP), Jameel Ahmad, indicated on Friday that Pakistan will repay a $1 billion International Sukuk bond three days before its due date on December 5, 2022.
The governor stated that funding has been set up to handle the expected $1.08 billion repayment amount.
SBP reserves are now at $7.825 billion, a $2 billion decrease from the previous fiscal year (FY23).
