Pakistan is facing significant foreign debt repayments totaling $4.33 billion in the April-June period of the current fiscal year in order to avoid default.
These payments encompass various obligations, including $1.232 billion to commercial banks, $265 million to the International Monetary Fund (IMF), $66 million for Naya Pakistan Certificate payments, $406.8 million to multilateral creditors such as the Asian Development Bank (ADB), and $185.3 million to the World Bank’s International Development Association (IDA).
Despite Pakistan entering into an IMF Standby Arrangement (SBA) last year, efforts to bolster the country’s foreign exchange reserves have faltered. Heavy debt repayments have impeded reserve-building endeavors, thereby challenging Pakistan’s ability to fulfill its commitments to creditors awaiting repayment.
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Currently, the State Bank of Pakistan (SBP) holds foreign exchange reserves amounting to $7.89 billion. It is anticipated that there will be a request for a $1 billion rollover from China to alleviate the debt burden.
Furthermore, a $1 billion 10-year sovereign bond is set to mature on April 15, 2024. In addition, the last quarter of FY24 will see payments totaling $32.88 million in principal and interest to bilateral creditors, which include Japan, France, Korea, among others. Moreover, external debt servicing liabilities are projected to increase to $754 million in 4QFY24.
