Arrangements made for $3.7bn worth of debt repayments: finance ministry

The Ministry of Finance on Tuesday moved to pacify concerns over Pakistan’s upcoming obligations, and said the government has made arrangements for the repayment of $3.7 billion debt due in May and June.

“The media has carried a news that $3.7 billion has to be repaid by GoP (Government of Pakistan) by the end of June, 2023, which is correct. However, this should not be any cause of concern as arrangements have been made for the rollover/repayment of this debt,” said the Finance Division in a statement.

“It may also be noted that during this period significant inflows are also in the pipeline,” it added.

“The coalition government has averted default and the economy is now on a course to stability and growth,” the Ministry of Finance added.

The statement comes after Bloomberg reported that Pakistan faces a total of $3.7 billion of debt payments starting this month.

“About $700 million of maturities are due in May and another $3 billion in June,” Krisjanis Krustins, a Hong Kong-based director at Fitch, said in an emailed response quoted by Bloomberg last week.

Fitch expects $2.4 billion of deposits and loans from China will be rolled over, the report added.

Concerns on Pakistan’s debt obligations are mounting as foreign exchange reserves held by the State Bank of Pakistan (SBP) are at $4.46 billion, barely enough for a month of essential imports.

The debt payments also underscore the crucial need for Pakistan to resume its bailout programme with the International Monetary Fund (IMF) which has been stalled at the ninth review since November last year.

Various measures including a floating exchange rate, additional taxes, and hike in energy tariffs have failed to convince the IMF to resume the bailout.

Moody’s Investors Service also warned that Pakistan could default without an IMF bailout as the country faces uncertain financing options beyond June, reported Bloomberg on Tuesday.

“We consider that Pakistan will meet its external payments for the remainder of this fiscal year ending in June,” Grace Lim, a sovereign analyst with the ratings company in Singapore, was quoted as saying in an emailed response to Bloomberg.

“However, Pakistan’s financing options beyond June are highly uncertain. Without an IMF programme, Pakistan could default given its very weak reserves.”