No possibility of debt default - Pakistan

Dubai: Pakistan's central bank Governor Shamshad Akhtar said there was "no possibility" of the nation defaulting on overseas debt and that the government will soon announce an economic stabilisation plan.

The plan "will help us attract capital flows", Akhtar told reporters in Dubai on Wednesday. The State Bank of Pakistan governor is holding talks with International Monetary Fund officials on a rescue package after the nation's foreign reserves shrunk more than 75 per cent in the past year to $4.03 billion (Dh14.8 billion).

International rating agencies have this month lowered the country's credit ratings, citing the nation's inability to repay debt.

The IMF loan "is under consideration, but we have a few plans, we have a game plan and we have other options", she said. "We are having discussions with the Friends of Pakistan" group to seek funds.

Pakistan is expected to seek financial support from the grouping, which is due to meet next month in the United Arab Emirates. The group, which was established last month to help Pakistan stabilise its economy, includes the US, the UK, China and Saudi Arabia.

The rating on Pakistan's government bonds was reduced by Moody's Investors Service to B3 from B2, six rankings below investment grade and the same level as Argentina, Lebanon and Bolivia.

The rating remains on watch for a possible additional cut, according to Tuesday's statement by Moody's. Standard & Poor's cut Pakistan's debt rating on October 6 to CCC+, or seven levels below investment grade.

Investors are concerned Pakistan will be unable to pay the $3 billion in debt-servicing costs due in the coming year, according to S&P. Pakistan's debt is perceived by investors as the riskiest in the world.

South Asia's second-biggest economy needs $3.5 billion to $4.5 billion this year for debt and other payments, according to Shaukat Tarin, finance adviser to the Pakistani prime minister.