KARACHI:Pakistan’s central bank has reported that the country has to meet a significantly high foreign debt obligation amounting to $10 billion in June and July 2024, which is building pressure on government high-ups to look for loan rollovers as well as arrange financing to repay it on time.
At present, Pakistan’s foreign exchange reserves stand at $9 billion, which are even lower than the debt obligation for the next two months. This leaves a very limited room for the government to settle debt with the current reserves and liberalise imports to give a fresh push to the economy.
Talking to The Express Tribune, Optimus Capital Management Head of Research Maaz Azam recalled that Pakistan had borrowed $3 billion from friendly countries including Saudi Arabia and the United Arab Emirates (UAE) between June and July last year.
It was followed by the receipt of the first $1 billion tranche of International Monetary Fund (IMF)’s loan in July 2023, which took foreign exchange reserves to around $8 billion from around $4 billion in June 2023.
The multilateral and bilateral assistance of $4 billion in June and July 2023 may be part of the potential rollover and repayment in June and July this year.“In June 2024 alone, we have to repay around $6.7 billion in principal debt, of which around $4 billion is expected to be rolled over,” Azam projected.
This is the time (June-July 2024) when Pakistan expects to secure the next IMF loan programme of $6-8 billion for three to four years. It needs the bailout to ensure foreign debt repayment without any interruption and get a cushion to prop up economic activities through financing imports.
According to the State Bank of Pakistan (SBP) and JS Global Research data published, the country is required to repay and roll over a total of $27.52 billion over a period of 12 months (May-April 2024-25).
Central bank data breakdown suggests that the government was obliged to repay $1.72 billion in May 2024. Later, in June and July 2024, it will have to repay and get rolled over $10.21 billion.
