Friday, November 12, 2010

Pakistan won’t seek debt write-off, rescheduling

Pakistan won’t seek debt write-off, rescheduling

ISLAMABAD: Finance Minister Dr Hafeez Shaikh on Thursday ruled out any possibility of putting a request before lenders and donor countries for loan write-offs and loan rescheduling during the upcoming Pakistan Development Forum meeting scheduled for November 14-15 at Islamabad.

Delegations from 30 countries and 264 representative from donor countries, five major lending and aid institutions have confirmed their participation in the PDF meeting, including the International Monetary Fund, World Bank, Asian Development Bank, Islamic Development Bank and minister-level participation has been confirmed by the UK, US and Japan.

Addressing a pre-PDF media briefing, the minister made it clear that Pakistan’s major lenders were multilateral donors like WB, ADB and IMF and the country could not afford to bear the heavy cost attached to this request. “Any call from Pakistan for debt write-offs, debt swap or debt rescheduling would give a bad signal to the international community, especially investors, and it could hurt their confidence in Pakistan’s economy. This kind of request could give an impression that the country is not able to service its debt. The country’s foreign debt-to-GDP ratio is within manageable limits. The loan from the US against Pakistan to date was $1.5 billion and only $59 million interest was being paid of this loan, so we don’t have any problems in its servicing,” he said.

However, he said that the country’s real concern was to stop an increase in domestic debt, which was causing inflation, resulting in an increase in interest rates and no credit for the private sector for industrialisation.

The minister disclosed that few countries were wilfully avoiding giving aid to Pakistan by raising issues like governance and transparency. The minister asked such countries to not give aid to the country, but refrain from defaming Pakistan and it’s transparent mechanism put in place. He, however, said that a majority of countries were willing to assist Pakistan in its most difficult times as well as to give practical suggestions for ensuring transparency.

On the question of transparency in utilising foreign aid put forward by an American journalist, the minister said the government had put in place all possible measures for transparent use of foreign aid as per the satisfaction of the international community and they had been asked to monitor the projects financed by them.

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