Bad News For Pakistan Country

Bad News For Pakistan: Moody’s Investors Service has warned that Pakistan is at an increased risk of failing to restart its $6.7 billion bailout programme with the International Monetary Fund (IMF), putting the country closer to a sovereign default, local media reported.

“There are increasing risks that Pakistan may be unable to complete the IMF programme that expires at the end of June,” a sovereign analyst with the rating company in Singapore Grace Lim said.

Lim said: “Without an IMF programme, Pakistan could default, given its very weak reserves.”

Pakistan is making a final effort to revive its IMF programme, with a financing gap of $2 billion and exchange-rate policy among the biggest hurdles. While the government has pledged to meet billions of debt obligations, investors have remained sceptical about the nation’s dollar bonds trading in the distressed territory since last year, Geo News reported.

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Pakistan faces about $23 billion of external debt payments for the fiscal year 2023-24, which begins in July. The amount is roughly five times its reserves and most of it is taken from concessional multilateral and bilateral sources.

Rupee pressure

The rupee, which is trading near a record low against the dollar, may face further downward pressure, Lim said in an emailed response to questions. The IMF’s comments on the exchange rate likely referred to the gap in the interbank and retail markets, she said.

The local currency has lost more than 20 percent this year after officials devalued the currency in January, making it one of the worst performers globally.

Pakistan’s financing options beyond June are highly uncertain, even as its external repayments will remain significant over the next few years, Lim said. Continuing the engagement with the IMF would support additional financing from other multilateral and bilateral partners, which could reduce default risk, she said.

Separately, Pakistan is looking to purchase spot shipments of liquefied natural gas for the first time in roughly a year after a rapid drop in overseas prices. This suggests that Pakistan may see itself on a better financial footing, as suppliers were hesitant to sell fuel to the nation last year out of fear it may not be able to meet future payments.

Pakistan Central Bank denies Debt Talks as payments will be made

Pakistan central bank Governor Jameel Ahmad denied officials were seeking debt restructuring talks as the South Asian country will pay $900 million of sovereign debt in June and expects $2.3 billion of obligations to be rolled over. The government, which is deadlocked with the International Monetary Fund over a $6.7 billion bailout program, has already paid $400 million of debt earlier this month, Ahmad said at an analyst briefing in Karachi on Monday.

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