Pakistan needs to repay another $3.7 billion in external debt by the end of June 30 this year, Bloomberg reported on Friday.
During the entire current fiscal year, the country has been struggling to avoid default with the help of friendly countries and multilateral lending agencies, but the next fiscal year is about to begin with another huge requirement of dollars.
In an interview with Bloomberg, a Fitch Rating official said Pakistan would have to repay $3.7 billion up to June 2023. The Fitch official expects China would roll over a $2.4-billion loan maturing next month.
According to the report, Pakistan has to pay $700 million in May and $3 billion in June. Despite support from Saudi Arabia and the UAE, the International Monetary Fund (IMF) remained unsatisfied to grant a bailout package. The staff-level agreement for $1.1 billion, too, has not been concluded.
The country is reeling under an economic crisis with inflation surging to 36.4%, the highest in its history and the highest in South Asia, while a political battle is raging between the government and former Prime Minister Imran Khan.
The debt payments underscore the crucial need for Pakistan to resume its bailout programme with the Washington-based lender that has been stalled since November last year.
BLEAK FUTURE
The situation is expected to get more difficult in the years ahead.
Pakistan’s GDP (gross domestic product) growth rate is expected to see a massive dip this fiscal. According to the SBP, the country’s economy grew by 6% in 2021-22. The World Bank projection brought it down by 93.33% for 2022-23, at 0.4%.
The IMF, in its latest forecast, predicted that the country will grow by 0.5%, while ADB estimates said it is slated to grow by 0.6%.
The country is facing a historically low foreign exchange reserve of $4.46 billion that can import just a month of essential items, historically high PKR to USD exchange rate at 283, and external debt of $126 billion.
An analysis by US-based think tank, United States Institute of Peace (USIP), stated that the country needs to repay $77.5 billion in external debt from April 2023 to June 2026.
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