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by IANS |
Karachi, Nov 17 (IANS) Pakistans default risk as measured by five-year credit-default swaps (CDS), insurance contracts that protect an investor against a default, rose sharply amid political turmoil and uncertainty about talks with the International Monetary Fund (IMF).
The CDS soared to 75.5 per cent on Wednesday from 56.2pc a day ago, Dawn news reported citing data provided by research firm Arif Habib Limited.
Official sources in Washington said last week the schedule for talks between Pakistan and the IMF had been readjusted, but the negotiations are continuing.
Media reports, however, claimed that the talks that were scheduled to begin in early November had been postponed until the third week of this month.
According to these reports, the talks would resume after Pakistan fulfilled its pledge to adjust sales tax on petroleum products and took other measures required under a loan agreement revived earlier this year.
But official sources told Dawn news said the talks were rescheduled after last month's release of a World Bank report on flood damages in Pakistan.
Pakistan is scheduled to pay $1 billion on December 5 against the maturity of five-year sukuk, or Islamic bonds.
Finance Minister Ishaq Dar has repeatedly assured for sukuk payment, but the international market is not ready to rely on assurances as the country's economy struggles to avoid default by borrowing more from the markets, donors, commercial banks and friendly countries, Dawn reported.
The day-to-day increase in the CDS reflects a grave situation, making it increasingly difficult for the government to raise foreign exchange from markets either through bonds or commercial borrowings.
The country requires $32 billion to $34 billion this fiscal year to meet its foreign obligations.
Financial experts said the country still needed about $23 billion through the remaining fiscal year.
