Bloomberg dismisses Pakistan’s default fears, warns of economic hardship
- By Web Desk -
- Jan 09, 2023
ISLAMABAD: US-based financial news service, Bloomberg has dismissed reports speculating that Pakistan was heading towards default, warning of economic hardship in near future, ARY News reported on Monday.
In a report issued by Bloomberg Economics, Ankur Shukla – who covers South Asia – said that Pakistan is likely to dodge default in the next six months, but its troubles are not over.
“The prevailing economic conditions will require assistance from International Monetary Fund (IMF),” the report stated, adding that the assistance from the Monetary Fund will help the country through the end of June.
According to the report, the investors are now worried about a big dollar debt repayment in April 2024, and are pricing those bonds at a distressed level. “In this regard, Pakistan needs more external aid,” it maintained.
The report further stated that the country, which suffered over $33 billion in losses consequent to the unprecedented floods, needs loan from the IMF to recover the damages. “The Fund would issue loans based on country needs”, it added.
“The IMF funding is also necessary to unlock $5 billion in financing expected from creditor nations and $1.7 billion in aid from the World Bank,” the report stated.
The report further stated that these funds will help cover $5.9 billion in debt payments and estimated account deficits through the end of the fiscal year ending in June and. “But the question now is how Pakistan will get through the 12 months after that, when its dollar financing needs will total at least $11 billion,” it claimed.
Read More: PAKISTAN WILL NOT DEFAULT, ISHAQ DAR ASSURES INVESTORS AT PSX
It is pertinent to mention here that the foreign exchange reserves held by the State Bank of Pakistan (SBP) plunged by $1.2bn to reach $4.5 billion.
According to details, the SBP-held foreign exchange reserves have fallen to $4.5 billion after the new debt repayments to UAE. Pakistan paid back $600mn to the Emirates NBD Bank and $415mn to the DIB on Friday.
After the fresh debt repayments, the forex reserves have dropped to $4.5bn, sufficient for only 25 days of import cover, they say.