The economic fallout from the Covid-19 crisis is likely to tip several of the world’s poorest countries into debt distress, forcing official creditors and private-sector lenders to accept a reduction or restructuring of loan repayments, the Paris Club group of creditor countries said on Tuesday, the Financial Times reported.
Moody’s has clashed with the UN after putting five countries on review for a downgrade in recent weeks, saying that a G20-backed debt suspension scheme poses risks to private creditors, the Financial Times reported. The rating agency took action against Ethiopia, Pakistan, Cameroon, Senegal and the Ivory Coast, after the countries opted into a G20-backed initiative that allows them to freeze official bilateral debt repayments due this year to member nations and members of the Paris Club, a group representing major credit countries.
Investors have warmed to Pakistan since the government secured a $6bn bailout from the IMF in July, removing any immediate threat of sovereign default, the Financial Times reported. MSCI’s Pakistan equities index is up more than a third from its August lows, compared with a gain of just over 10 per cent for MSCI’s flagship emerging market index. Foreign investors have made a tentative return to the country’s local debt market, buying $1.2bn of local currency government bonds since July after staying away for most of the past two years.
After a year of fending off an International Monetary Fund bailout, Pakistan’s Prime Minister Imran Khan wants to win one this week with a plan to jolt his economy into shape—potentially at the expense of the agenda that helped him get elected, The Wall Street Journal reported. The IMF board is due to meet Wednesday in Washington to consider whether Pakistan is undertaking enough tough action to get a loan of $6 billion over three years. Mr.
Pakistan’s central bank has increased interest rates, as expected, citing the need to contain inflation and a devaluation of the rupee, which has shed nearly 6 per cent in two months, the Financial Times reported. The State Bank of Pakistan on Monday raised its key policy rate 150 basis points to 12.25 per cent. The rupee has fallen about 5.9 per cent against the dollar since March. Analysts said the rate rise was made in line with Pakistan’s IMF commitments to secure a $6bn loan to stabilise the country’s weak economy.
Pakistan and IMF negotiators have reached an agreement on a $6bn loan for the country, the finance ministry said last night. Speaking on state-run Pakistan Television, Abdul Hafeez Shaikh, head of the finance ministry, said: “We have reached an agreement with the IMF staff for $6bn for the next three years. There will be adjustments involved but we will try to make certain that the extent of pain on low-income people is minimal.” The agreement is yet to be formally confirmed by the IMF’s management and its executive board, the Financial Times reported.
Pakistan’s finance minister resigned on Thursday following widespread criticism over the country’s economic crisis and his handling of a bailout deal with the IMF, the Financial Times reported. Asad Umar’s departure comes amid frustration from business leaders and opposition politicians with Islamabad’s decision last year to turn to countries including Saudi Arabia and China for at least $7.2bn in short-term loans instead of securing an IMF bailout package.
Pakistan’s finance minister announced a range of measures on Wednesday to narrow fiscal and trade deficits as prime minister Imran Khan prepares to present the government’s case to the IMF for a loan to rebuild confidence in the country’s economy, the Financial Times reported. In a speech in the lower house of parliament, Asad Umar unveiled a cut in import duty on industrial raw materials to raise industrial productivity and help ease a chronic energy crisis that has caused repeated power outages and gas supply interruptions.
Pakistan’s currency plunged as much as 5 per cent on Friday in what traders suspect was a devaluation of the currency amid rescue talks with the IMF, the Financial Times reported. The currency traded as weak as 141 rupees to the US dollar, from Thursday’s closing level of 133.9, according to Refinitiv data. ”The IMF’s main demands [for a new loan] included a devaluation of the rupee,” a central bank official in Karachi told the Financial Times. The rupee has tumbled about a fifth since the end of last year in a series of devaluations to avoid a balance of payments crisis.
Pakistan’s prime minister Imran Khan was welcomed in Beijing with full honours and promises of support but hopes of Chinese help to rescue the country from a looming balance of payments crisis were dented by the conspicuous absence of any concrete announcement of generous aid, the Financial Times reported. Pakistan is seeking its 13th bailout since the 1980s from the International Monetary Fund. An IMF delegation is expected to visit Islamabad this week to begin discussions on a crucially important new loan to help avert crisis.