Webdesk: Moody’s Investors Service has warned that Pakistan is more likely to fail to restart its $6.7 billion bailout program. It is with the International Monetary Fund (IMF), which would bring the country closer to a sovereign default.
“The chance that Pakistan won’t able to finish the IMF program that ends at the end of June is growing”. Grace Lim, a sovereign expert at a rating company in Singapore, said.
Lim said, “Pakistan could go bankrupt without a plan from the IMF because its reserves are so low.”
Pakistan is making one last effort to get back on track with its IMF program. The biggest problems are a $2 billion funding gap and the exchange rate policy. Even though the government has promised to pay back billions of dollars in debt, investors have been skeptical about the country’s dollar bonds, which have been trading in “distressed territory” since last year.
For the fiscal year 2023–24, which starts in July, Pakistan will have to pay back about $23 billion in foreign loans. The amount is about five times what it has on hand, and most of it comes from international and bilateral sources that give money for free.
On Monday, State Bank of Pakistan (SBP) Governor Jameel Ahmad denied that officials were looking for debt restructuring talks because the country will pay $900 million of sovereign debt in June and expected $2.3 billion of obligations to be rolled over.
In Asian trade on Wednesday, the price of the country’s $1 billion bond due in April of next year, which had dropped almost 3 cents in the previous two days, stayed about the same at 55.6 cents on the dollar.
