By:Mehek Usuf
Karachi: Pakistan’s risk of default, which is measured through the five-year currency default swap (CDS) index on Monday, now surging by 30 percentage points in a week to 93% ahead of debt repayment $1 billion for a maturing international bond early next month.
A major decline of 38% was observed in exports from 2013 to 2018, which was a huge deficit for the current account. Pakistan Tehreek-e-Insaf (PTI) government did not follow the agreement with the International Monetary Fund (IMF), which is why the risk of default increased.”
Miftah Ismail, the leader of Muslim League (N), while issuing a message on the social networking website Twitter, wrote that “I don’t know what is the best dollar rate, only the market can determine it.” Imports were $80 billion and exports $31 billion last year, and the No.1 priority of Finance Minister Ishaq Dar shouldn’t be to make imports cheaper & export harder, which is what an appreciated rupee does.
Former finance minister and Pakistan Muslim League – Nawaz (PML-N) leader on Sunday claimed while criticising his party led federal government that Country is on verge of default as risk is now at alarming level. Miftah Ismail claimed in his articles, rejected the claim of incumbent Finance Minister Ishaq Dar regarding the economy and clearly stated that the bankruptcy risk of Pakistan has increased to a dangerous level,”“Now the government has no room for error.”
He further stated that after paying off the Sukuk bonds in December, the risk of bankruptcy wouldn’t end. If the government does not do right things, they will have no right to criticize PTI or anyone else. He further, in his article described the devaluation of the rupee as a major problem in the country’s economy and wrote that today there is a large and constant gap between the open market and interbank exchange rates.
Miftah also said that “we cannot take any risks but at the same time we need to make effective strategies for the creditors. However, he advised the government to prioritize the national interest rather than the political interest.
Finance Minister Ishaq Dar reiterated that Pakistan will not default on any of the international payments and that volatility in the CDS had nothing to do with the country’s default risk. Dar ruled out the risks and said, “Bloomberg pitches Pakistan’s one-year probability of default at a low of 10% as opposed to a highly dubious number of 93% circulated by an unscrupulous local political leader a few days ago.”
“Pakistan will Insha’Allah continue to honor its all financial commitments on time,” he added