KARACHI: Despite foreign exchange difficulties, Pakistan has successfully made timely repayment of foreign debt amounting to $ 1 billion on maturity of international bond on Friday, the State Bank of Pakistan reported Saturday.
The SBP executed the repayment of $1 billion (including principal and interest) on April 12, against a 10-year Eurobond, launched in 2014 and matured in April 2024. The payment was made to the agent bank for onward distribution to the bondholders, the SBP said.
This repayment has reduced the stock of the external debt acquired through the sale of Eurobonds and Sukuks in international markets below $7 billion mark. Previously, despite facing a foreign exchange reserves crisis, Pakistan had made a repayment of Eurobond worth $1 billion in December.
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“After repayment of Eurobonds, Pakistan’s total outstanding international Bonds and Sukuk are $6.8 billion of public external debt with the next maturity amounting to $500 million in September 2025,” said Shahid Habib CEO AHL.
He said that in order to build the foreign exchange reserves, the government is also considering launching new international bonds. Finance Minister Muhammad Aurangzeb has recently mentioned that efforts will be made to explore opportunities in the Chinese bond market, he added.
After the repayment of international bonds, the foreign reserves held by the SBP are likely to reduce at the $7 billion mark as previously, it stood at $8.04 billion in the first week of April. The latest foreign exchange data will be released by the SBP in the next week.
However, on a positive note, the third and last tranche of the IMF SBA program amounted to $1.1 billion is likely to be released by the end of this month. The release of payment will help to build the sliding foreign exchange reserves of the country and enhance the capacity of external debt repayment.
After completing the IMF SBA programme, Pakistan also needs another new full-fledged bailout program to maintain the foreign exchange reserves at a sustainable level.
According to the IMF, Pakistan has shown big improvement in its economy and is completing its current programme, however, there are some crucial issues that need attention. These issues include expanding the tax base, directing public spending effectively, and fostering transparency.
SBP Governor Jameel Ahmad had already said that Pakistan is out of default as full arrangements have been made for repayments of the external debts. However, he has urged to enhance exports, home remittances and FDI besides curtailing the import to improve balance of payment and build the foreign exchange reserves.
Copyright Business Recorder, 2024
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