Thursday Mar 23, 2023
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Pakistan has to repay close to $3bn in next quarter

A foreign currency exchange dealer counting $100 bills. — AFP/File
A foreign currency exchange dealer counting $100 bills. — AFP/File

  • Pakistan will have to devise another plan if IMF does not offer SLA.
  • Sources say these were tentative numbers as repayments might vary due to exchange rate movements.
  • In the ongoing quarter, Pakistan made debt repayments of $5.4bn.

ISLAMABAD: Amid dwindling foreign exchange reserves held by the State Bank of Pakistan (SBP), the country’s external debt servicing requirements for repaying principal and mark-up in dollar amounts will be standing at approximately $3 billion in the last quarter (April-June) of the current fiscal year, reported The News.

In an important development, Pakistani authorities confirmed that China has granted its approval for the rollover of SAFE deposits of $2 billion.

“Yes,” was a brief response given by a Finance Ministry official to the publication when asked about the rollover. The deposit was scheduled to mature today (Thursday).

Pakistan will have to repay close to $3 billion in the last quarter (April-June) of the current fiscal year as part of its external debt obligations. Pakistani authorities will have to devise a plan B if the IMF does not offer the staff-level agreement.

When contacted, an official said, “We would devise a Plan B if Plan A does not work. Plan A is reviving the IMF programme.”

According to details available with The News, Pakistan would have to repay in the shape of principal and mark-up amounts of $316 million in April 2023. This external debt repayment amount would increase up to $753 million in May 2023. In June 2023, the total external debt servicing requirements will jump up to $1.894 billion.

This external debt servicing requirement does not include IMF’s repayments. However, sources said that these were tentative numbers of external debt repayments which might vary due to exchange rate movements.

Pakistan has been experiencing a double-edged sword as on the one side, the country would have to repay $23 billion in external debt servicing, including rollovers, and on other hand, the capability of fetching dollars in the shape of foreign loans also shrank significantly.

Pakistan’s total external debt servicing requirements stood at $23 billion for the current fiscal year. In the ongoing quarter (Jan-March) period of the current fiscal year, the total debt servicing requirements on the external front were estimated at $5.462 billion.

It includes principal repayment amounts of $5.03 billion such as repayments of $761.1 million and the second amount of $874.73 million, totalling the principal amount going up to $1.635 billion.

There are another two repayments in the shape of a principal amount to the tune of $1.4 billion and another $2 billion as Chinese SAFE deposits.

In the shape of interest repayments on the external front, it stood at $428.88 million including $147.38 million, and $189.15 million making the total amount $336.5 million. There are two other markup repayments of $72.19 million and $18.16 million, so the total markup amounts would climb to $426.88 million.

There is another challenge as the country’s capability to generate dollar inflows in the shape of loans was slashed significantly as Islamabad could only secure only $7.4 billion in the first eight months (July-Feb) period of the current fiscal year against over $12 billion in the same period of the last financial year, registering a decline by over 39%.

Originally published in The News