Pakistan may declare partial moratorium on debts

ISLAMABAD, July 8: Pakistan'S finance minister Sartaj Aziz said on Wednesday that in just three weeks Pakistan may be forced to declare a pa...

ISLAMABAD, July 8: Pakistan’S finance minister Sartaj Aziz said on Wednesday that in just three weeks Pakistan may be forced to declare a partial moratorium on its debt repayments if international lending institutions withhold money to punish Pakistan for its nuclear programme.

Addressing a press conference in Islamabad, Aziz said that at the end of this month Pakistan must pay roughly $ 800 million towards its $ 33 billion external debt. Without international help, that payment would wipe out Pakistan’s foreign exchange reserves, leaving no money to pay for imports.

Instead, Aziz said that Pakistan would consider a “partial moratorium.” He said that within two or three weeks, the International Monetary Fund must let Pakistan know whether it was ready to resume funding.

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This statement followed a day of meetings between Sartaj Aziz and IMF director Paul Chabrier. “They (IMF) want to help but the group of eight industrialised countries has agreed on sanctions against Pakistan,” said Aziz. This meansroughly $ 1.5 billion, which Pakistan cannot afford. Aziz said that he had warned the IMF that sanctions could create an economic turmoil, spin out of control and result in chaos.

The Pakistan finance minister said the options before Pakistan “are few.” He said that Pakistan would consider restricting its imports.

He said that while the Pak govt had prepared a contingency plan, “this plan is for three months only.” Foreign exchange reserves have started slipping as fears mount that the country will not be able to meet its foreign debt payments in the year. An IMF team is currently reviewing its extended loan agreements with the Pakistan government. IMF director Paul Chabrier met Sharif in Islamabad on Wednesday. Aziz told journalists that the meetings were positive “but there were no guarantees.”