Pakistan is required to repay an additional $3.7 billion in external debt by June 30 of this year, according to Bloomberg.
Throughout this fiscal year, the country has been struggling to avoid default with the assistance of friendly nations and multilateral lending agencies. However, the next fiscal year is about to begin with another significant dollar requirement.
A Fitch Ratings official said in an interview with Bloomberg that Pakistan must repay $3.7 billion by June 2023, with the Fitch official predicting that China will roll over a $2.4 billion loan maturing next month.
The report indicates that Pakistan must pay $700 million in May and $3 billion in June, and despite support from Saudi Arabia and UAE, the IMF remains dissatisfied. The IMF was unable to conclude a staff-level agreement for $1.1 billion, despite announcements by the prime minister and finance minister that Pakistan has met all the pre-conditions for the 9th review.
Fitch Ratings, on the other hand, anticipates an agreement between Pakistan and the IMF, as Pakistan has already received financial commitments from Saudi Arabia and UAE. Delaying the release of the tranche would harm the economy, according to former finance minister Miftah Ismail, who recently told a private TV channel that the IMF should release it because all the conditions have been met.
Independent economists and analysts believe that both default and external debt restructuring would be detrimental to the economy. With China’s assistance, Pakistan has been working hard to avoid both situations.
On Friday, China’s foreign minister arrived in Islamabad for a two-day visit to discuss critical issues, including funding and loan rollovers. Some experts believe that Chinese power companies are unhappy with payment delays, and Pakistan’s growing power debt is a serious issue for China. Due to extremely poor foreign exchange reserves, Pakistan is also not allowing outflows of profits and dividends.