Islamabad September 23 2022: Pakistan is seeking debt relief from bilateral creditors and not from commercial bondholders, Finance Minister Miftah Ismail said hours after comments from the nation’s premier roiled its dollar bonds.
The South Asian country will repay on time its $1 billion sovereign bond due in December, Ismail said by text message in response to Bloomberg queries. A large portion of debt is in the form of deposits from “friendly countries” who have promised to roll them over, he added.
“We are seeking debt relief from the Paris Club’s bilateral creditor countries, just as it was done during” the pandemic, Ismail said. “We are not seeking, nor do we need to seek, any relief from our commercial bank debt nor from Eurobond debt.”
The comments follow those from Prime Minister Shehbaz Sharif who, in a Bloomberg interview, made an urgent appeal for debt relief from rich nations as catastrophic floods exacerbated by climate change displaced millions of citizens. Separately, the Financial Times cited a draft UN policy paper as saying that Pakistan should seek to suspend international debt repayments and restructure its loans.
Pakistan’s dollar bonds fell by the most on record after Sharif’s statement. The 5.625% 2022 dollar bond maturing in December dropped nearly 11 cents to trade at 81.9 cents on the dollar, while its 7.375% 2031 dollar bond slumped about 7 cents to trade at 40.33 cents on the dollar.
Pakistan’s rupee is among the worst performers against the US dollar globally this month and is trading close to its record low.