Pakistan will not seek debt restructuring from Paris Club creditor nations, the country’s finance minister Ishaq Dar said on Sunday as he sought to restore market confidence after a credit rating downgrade.

The new rating from Moody’s raised concerns that Pakistan could default on its foreign debt as contends with economic turmoil and a balance of payments crisis.

“We have decided not to go to Paris Club,” Dar said, adding that in consultation with Prime Minister Shehbaz Sharif it was decided that it wasn’t in the nation’s interest to ask for a restructuring.

“We will fulfil all sovereign (debt) commitment,” he said.

Dismissing market rumours that the government might extend maturities for its bonds, Dar told a news conference in Islamabad that Pakistan will fulfil all multilateral, international and bond obligations.

“God willing, we will pay the bonds on time,” said Dar. “We are not extending the bond maturity.” Pakistan’s Eurobond matures in December this year.

Moody’s last week downgraded Pakistan’s credit rating from B3 into so-called junk territory at Caa1, citing external risks and concerns about Pakistan’s ability to secure required financing to meet its needs in the next few years.

Dar has previously said that Pakistan will meet the requirement to raise nearly $35 billion in external financing for the 2022-23 financial year.

Pakistan Prime Minister Shehbaz Sharif last month made an appeal to the Paris Club for a debt moratorium after the country’s already struggling economy was hit by devastating floods that his government estimates will cause economic losses up to $30 billion.

Nearly 33 million people have been affected and 7.9 million displaced after flooding caused by abnormal monsoon rains.

Ishaq Dar said after his appointment as a finance minister recently that he will work to rein in inflation while cutting interest rates, saying the rupee currency was undervalued and promising a strong response to the South Asian nation’s worst economic crisis.

In his fourth time in the job, the chartered accountant is facing a balance of payment crisis, foreign reserves that cover barely a month’s imports, historic lows in the rupee, inflation exceeding 27% and the aftermath of devastating floods.

“We will control inflation,” Dar told reporters in televised comments after he was sworn in.

“We will bring interest rates down,” he said. He did not explain how he would tame price pressures while also cutting rates.

Dar also had a warning for currency market speculators, saying that the Pakistani rupee was undervalued. It has weakened more than 30% against the US dollar so far this year.

“Our currency right now is not at the place where it should be, it is undervalued,” said Dar, who is known to favour currency market intervention to keep the rupee stable.

“I hope the speculators will stop. I think they have already got it and we are seeing the rupee rising,” he added. “No one will be allowed to play with the Pakistani currency.”

The country’s sovereign dollar-denominated bonds fell to record lows on Wednesday, signalling growing fears of a default.

Shorter-dated issues suffered the biggest decline, with the 2024 bond bid at 40.2 cents on the dollar, according to Tradeweb data. Bonds due in 2025 and 2027 fell just over 4 cents while longer-dated maturities were bid at just over 36.6 cents in the dollar.,

The premium demanded by investors to hold the bonds blew out to record levels, with the sovereign spread over US Treasuries widening to 2,442 basis points on the JPMorgan EMBI Global Diversified index.

“We thought even before this (the huge floods) that there was a high likelihood of a debt restructuring so the way I would put it is that likelihood is now significantly higher,” said Carl Ross, a partner at investment firm GMO.

“The numbers being talked about, 10% of GDP or so in damages, that is probably going to require burden sharing across a lot of different stakeholders.”

A member of parliament’s upper house, Dar got the job after his predecessor, Miftah Ismail became the fifth to quit the post in less than four years, amid persistent economic turbulence.

Analysts say Dar’s key mandate is to halt inflation that mainly stems from his predecessor’s unpopular decisions to stick to preconditions set by the International Monetary Fund (IMF), including rolling back subsidies made by Khan’s government.

As the new government took over, the IMF’s $6 billion bailout package agreed in 2019 was in question because of the lack of an agreed policy framework.

Last month the IMF board approved the programme’s seventh and eighth reviews, allowing the release of more than $1.1 billion in funding assistance.

Former finance minister Ismail had said the tranche was likely to be increased after Pakistan sought help to remedy economic losses of an estimated $30 billion caused by the unprecedented floods.

The disaster could cut economic growth to below 3%, from 5% estimated for fiscal 2022-23, the government has said.