The minister said that if India buys oil from Russia, “we have the right too” because Pakistan has the goal of maintaining its shrinking exchange rate.
The country’s finance minister said Pakistan was considering buying discounted Russian oil as he sought to assuage concerns that the country may need to cancel its Paris Club debt following the devastating floods.
Credit agency Moody’s downgraded Pakistan’s sovereign rating by one notch on October 6, citing increased liquidity and external vulnerability risks from the economic impact of flooding. a decision hotly contested by the government.
Economists say Pakistan will have to find ways to increase and save its foreign exchange reserves, which have shrunk to about a month on imports consisting largely of oil and gas purchases.
Asked if Pakistan could turn to cheap Russian oil, Finance Minister Ishaq Dar told reporters: “We are definitely looking at that. If India buys oil from Russia, we also have the right [to do so]. “
Group of Seven richest economies have been trying to implement price-limiting mechanism for Russian oil exports on December 5, when European Union sanctions banning the import of Russian crude oil by sea went into effect.
Prime Minister Shehbaz Sharif has called on the Paris Club to write off its debt, but Dar said on Wednesday that Pakistan would not seek restructuring from that group of creditor countries, nor would it default.
“God willing, we can 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 unsettled with a widening current account deficit, more than 20% inflation and a massive depreciation of the rupee, has further weakened by floodshas an estimated economic impact of more than $30 billion.
Dar, who told Reuters in an interview last week that Pakistan would seek to restructure $27 billion worth of bilateral debt, also said Pakistan would repay $1 billion in Eurobonds due this year.
He met with credit rating agencies and US administration officials last week at the annual meetings of the International Monetary Fund and the World Bank.
Dar is the latest in a line of scorned finance ministers in the South Asian country. He replaced at the end of last month Miftah Ismail, who served as Pakistan’s fifth finance minister for about four years and lasted only six months. This is the fourth time Dar, a veteran politician and a chartered accountant, has been awarded this portfolio.
