Pakistan is in talks with bilateral creditors to change some terms of its repayment structure as it tries to stave off a default.
(Bloomberg) — Pakistan is in talks with bilateral creditors to change some terms of its repayment structure as it tries to stave off a default.
Finance Minister Ishaq Dar said the government will engage in negotiations on its bilateral debt, but doesn’t plan to ask creditors to take major reductions on principal. The nation will seek to service interest payments and push back principal payments to free up cash flow, Dar said in an interview with Geo Television channel.
The South Asian nation has been trying to salvage a loan program with the International Monetary Fund to avert a default. It faces about $22 billion of external debt payments for fiscal year 2024, which begins in July, according to Columbia Threadneedle Investments, which is about five times its reserves.
Read more: Pakistan Narrows Funding Gap, Hopes for IMF Loan This Week (1)
The interview came after the government presented a budget Friday for the next financial year that aims to balance boosting economic growth with austere conditions imposed by the IMF to revive the bailout program.
Pakistan has been downgraded by Moody’s and Fitch this year. Its dollar bonds have returned 6.2% this year, beating the average return of 3.2% across developing nations, according to a Bloomberg index.
–With assistance from Ismail Dilawar.
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