Pakistan is considering buying discounted Russian oil, its finance minister has said, as he sought to allay concerns that the country might need to reschedule its Paris Club debt following devastating floods.
Credit agency Moody’s cut Pakistan’s sovereign rating by one notch on October 6, citing increased liquidity and external vulnerability risks caused by the floods’ economic impact, in a decision strongly contested by the government.
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Economists have said Pakistan will have to explore all options to raise and save on its foreign reserves, which have fallen to around one month of imports that consist largely of oil and gas purchases.
Asked if Pakistan might turn to cheap Russian oil, Finance Minister Ishaq Dar told reporters: “We’re definitely considering it. If India is buying oil from Russia, we also have a right [to do so].”
The Group of Seven richest economies has been trying to enforce a price-capping mechanism on Russian oil exports by December 5, when European Union sanctions banning seaborne imports of Russian crude come into force.
Prime Minister Shehbaz Sharif has appealed for debt relief from the Paris Club, but Dar said on Wednesday that Pakistan would not seek a restructuring from that group of creditor nations, and neither would it default.
“We can, God willing, manage [to meet our fiscal commitments],” he told a conference in Islamabad. “I assure you, you don’t need to worry.”
Pakistan’s economy, already in turmoil with a rising current account deficit, more than 20 percent inflation and a massive rupee depreciation, has been further weakened by the floods, whose economic impact is estimated at more than $30bn.
Dar, who told Reuters in an interview last week that Pakistan will seek a restructuring of bilateral debt worth $27bn, also said Pakistan repay a $1bn Eurobond that matures this year.
He met credit rating agencies and US administration officials last week at the International Monetary Fund and World Bank annual meetings.
Dar is the latest in a line of finance ministers in the beleaguered South Asian nation. He replaced late last month Miftah Ismail, who was Pakistan’s fifth finance minister in about four years and lasted only six months. This is the fourth time that Dar, a veteran politician and a chartered accountant, has been given this portfolio.