Pakistan doesn't have enough foreign exchange reserves to pay debts: Moody's

Pakistan does not have enough foreign exchange reserves to pay its public and private external debt due over this year, a report by Moody’s said on Thursday.

“Foreign exchange reserves are low, and gross borrowing requirements are large in Pakistan and Sri Lanka, threatening the ability of these governments to refinance debt and fund deficits affordably,” Moody’s Investors Service said in its report.

The credit rating agency said the total public and private external debt due over the next year is larger than foreign exchange reserves.

Foreign exchange reserves are on lower side in Pakistan. The lower reserves threaten government to refinance debt, it noted.

Pakistan’s foreign reserves declined owing to persistent current account deficit. The reserves coverage of imports has also fallen, Moody’s further said.

“Reserves are now worth less two months of goods and services imports,” the credit agency noted.