ISLAMABAD: The Ministry of Finance and the Ministry of Economic Affairs have rejected the option of rescheduling Pakistan’s external debt as inappropriate because a large part of the external debt cannot be rescheduled until the country is declared bankrupt. .
Sources told The Asian Trade TV Tribune that a day ago a meeting was held in the Ministry of Economic Affairs to review the situation of loans in which Federal Minister for Economic Affairs Ayaz Sadiq and Minister of State for Finance Ayesha Ghos Pasha participated. In the meeting, the total external debt of 97 billion dollars and the option of rescheduling it were reviewed.
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An official of the Ministry of Economic Affairs said that about 66 billion dollars of loans have to be returned to us by 2027. Out of the total 97 billion dollars of external debt, rescheduling cannot even be considered for 74 billion dollars.Dr. Aisha Ghos Pasha said that the Ministry of Finance is against rescheduling loans and that we are looking for other ways to pay back the loans and get more money from the Ministry of Economic Affairs.
The Ministry of Economic Affairs has taken a stand that only the period for returning foreign safe deposits can be extended. In the meeting, it was considered that only 16 billion dollars of external loans could be rescheduled, most of which have been taken from China.
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Chinese loans are mostly concessional, Pakistan owes China $26.8 billion in bilateral and guaranteed loans, of which $5.3 billion is to be repaid over the next five years. Apart from this, China’s commercial loans of 6.5 billion dollars also have to be returned, which cannot be rescheduled. China’s Safe Deposit is worth $4 billion and can be paid back over a period of up to five years.
According to the Ministry of Economic Affairs, the value of non-concessional commercial loans is 25.3 billion dollars, including sovereign bonds of 8.8 billion dollars, cash deposits of 7 billion dollars, and commercial loans of 9.5 billion dollars. A total of $36.5 billion is required.
Saudi Arabia’s safe deposit of $3 billion is likely to be extended in December. However, it is not possible to reschedule the $18 billion in commercial loans and sovereign bonds as asking for such a facility is tantamount to declaring default. Pakistan’s multilateral debt is $35.4 billion, most of which is discounted, and $13.7 billion is required to repay it in the next five years.
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The meeting was told that multilateral lenders reschedule loans only when the debtor country is extremely poor and burdened with debt. The volume of bilateral loans is 20 billion dollars, and 10.6 billion dollars are required to repay it in the next five years. Pakistan has already rescheduled a loan of 3.7 billion dollars from the G20 countries for the purpose of Corona aid. China’s 16 billion dollar loans are also included in these bilateral loans.
According to sources, Paris Club creditors offer rescheduling under the G20 framework, but this requires rescheduling of bilateral loans as well as commercial loans, which is tantamount to declaring bankruptcy. This rescheduling option was rejected.
