Pakistan wouldn’t face default in 2023: Report

Pakistan Wouldn’t Face Default In 2023: Report:

Pakistan Wouldn’t Face Default In 2023: Report

ISLAMABAD: Pakistan is unlikely to face default in 2023 though the economic situation will remain critical in the country.

The International Monetary Fund (IMF) will provide more financial assistance to Pakistan soon which will enable the country to avert the risk of default till the end of 2023.

The Bloomberg has reported this development today after evaluating the prevailing economic situation in the country.

“Pakistan now has $4.5 billion in foreign exchange reserves with the State Bank which will be adequate to cover the next five months of funding requirements. Foreign assistance will boost the SBP’s reserves to $15 billion in coming few months which will cover dollar payments till March 2024,” the report added.

The investors, however, are worried about a big debt repayment in April 2024, and they are pricing those bonds at a distressed level. At present, the bond is trading at a 46% discount rate.

Pakistan is struggling to stabilize its depleting foreign exchange reserves, weakening rupee, and worsening macroeconomic indicators.

Last week, Pakistan has repaid $1.1 billion to two commercial banks in Dubai which threw reserves with the SBP to $4.5 billion.

Meanwhile, last week the government has returned $600 million commercial loan of the Emirates Bank and $420 million loan of the Dubai Islamic Bank.

Resultantly the forex reserves with the State Bank of Pakistan have dropped to $4.5 billion as the government desperately awaited financial support from Saudi Arabia, China, and disbursement of $1.1 billion tranche from the IMF.

National foreign exchange reserves are around $10.3 billion as the commercial banks are holding about $5.8 billion reserves at this time.

Prime Minister Shehbaz Sharif is attending the Climate Resilience Conference in Geneva today (Monday), anticipating more than one billion dollars immediate support from the international donors.

The United Nations Secretary-General Antonio Guterres has arranged the conference in Geneva on the request of Pakistan government to mobilise world community’s support in the backdrop of recent catastrophic floods.

On Friday, Prime Minister Shehbaz Sharif said that a team of the IMF is arriving in Pakistan in two days to complete the ninth review of the economy. He said that the IMF team would finalise the ninth review, leading to the disbursement of $1.1 billion next tranche from the fund.

Premier said, “I spoke to the managing director of IMF Kristalina Georgieva and urged her to soften conditions and support Pakistan to complete the ninth review.”

He said, “I urged MD of the IMF to relax the terms of the bail out package because the masses are not in a position to bear burden of hike in utility cost.”

Finance Minister Ishaq Dar will meet the IMF team on the sidelines of Geneva conference on Monday to pace up ninth review to qualify for the release of $1.1 billion next tranche from the IMF.