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ISLAMABAD: Pakistan is likely to dodge default in the next six months, but its troubles are not over, stated Bloomberg Economics in a report on Monday.

Ankur Shukla, who covers South Asia at Bloomberg, stated that the International Monetary Fund (IMF) will help the country through the end of June. “But investors are now worried about a big dollar debt repayment in April 2024, and are pricing those bonds at a distressed level,” the report added, as it made the case for Pakistan needing more external aid. The bond is trading at a 46% discount, reports suggest.

“Pakistan now has $5.6 billion in foreign exchange reserves, enough to cover the next five months of funding needs. External aid should boost the number to $14.9 billion. This should cover dollar payments only through March 2024 — leaving the April bond repayment in question,” the report added.

Pakistan is currently reeling from economic distress amid fast-depleting foreign exchange reserves, weakening rupee, and worsening macroeconomic indicators. It repaid some $1 billion over the weekend, which is likely to result in lower foreign exchange reserves when the State Bank of Pakistan (SBP) releases its data this week.

The Bloomberg report added that the IMF could still withhold remaining loan tranches totalling $2.6 billion. “But we think this is unlikely given the country’s desperate need in the wake of last summer’s floods.”

Foreign exchange reserves at almost 9-year low level

Experts have said that resumption of the IMF programme, which remains stalled, is crucial for the country. The IMF funding is also necessary to unlock $5 billion in financing expected from creditor nations and $1.7 billion in aid from the World Bank.

“These funds will help cover $5.9 billion in debt payments and estimated account deficits through the end of the fiscal year ending in June and, again, we think these funds will materialise.

“But the question now is how Pakistan will get through the 12 months after that, when its dollar financing needs will total at least $11 billion.” A delegation of IMF will meet Finance Minister Ishaq Dar on the sidelines of the upcoming Geneva conference to discuss outstanding issues.

The Geneva conference, currently under way, is being co-hosted by the Pakistan government and the United Nations, urging countries, organisations and businesses to step up with financial and other support towards a long-term recovery and resilience plan to climate change that saw the country saw disastrous floods last year. According to Pakistan’s Resilient Recovery, Rehabilitation and Reconstruction Framework, which it will officially present during the conference, $16.3 billion will be needed in all.

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Mohammed zaveri Jan 10, 2023 11:18pm
First government needed to change other wise no matter how much money given to Pakistan still will reman same because of taug government they will steal all money and deposit in their foreign account . For the sake of country check all foreign accounts of there’s taug and ask where this money come from in 75 years all money stolen from Pakistan and deposit in foreign account and this will happen same again till this government is not removed God bless Pakistan and their pover people thanks
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Khan Bahadar Jan 11, 2023 11:52pm
During the PTI government, foreign debt rose by $ 35.3 billion or 37 percent The PTI government borrowed $49.23 billion during its 45 month stint.
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