Pakistan Muslim League Nawaz (PMLM) leader and former finance minister Miftah Ismail Sunday said that Pakistan’s default risk has climbed up again and reached dangerous levels.
In an op-ed in Dawn, the former minister said that the risk won’t vanish even after the December bonds are paid off.
“At the risk of sounding an alarm, I have to say that we have no room left for error. Concrete measures that reassure markets and lenders are urgently needed,” the minister added.
However, the former finance czar said it was the breaking of the International Monetary Fund (IMF) agreement by the previous government that set in motion the upward trend in the country’s default risk.
He noted that as the finance minister he let the markets decide the rupee-dollar parity adding that today there is a large and persistent difference between the open market and the interbank exchange rates. He said that the difference suggests that the central bank is informally guiding banks on the exchange rate.
The PMLN leader added that the large difference between the open market and the interbank exchange rates is detrimental to Pakistan’s exports and remittances and is encouraging imports.
It is pertinent to mention here that State Bank of Pakistan (SBP) Governor Jameel Ahmad said on Friday that Pakistan will repay a $1 billion International Sukuk bond three days before its due date of December 5, 2022.
The governor said that the repayment amount is around $1.08 billion and funding against this repayment has been arranged.
SBP reserves have fallen by nearly $2 billion in the current fiscal year (FY23) and currently stand at $7.825 billion.