Tuesday, March 21, 2023

Pakistan repays $1bn sukuk before maturity to avert default risk


ISLAMABAD: Pakistan has successfully made a repayment of $1 billion international Sukuk (Islamic bonds) on Dec 2, three days before its due date of maturity, according to Finance Ministry.

Islamabad was due to pay the $1 billion sukuk bond on December 5 but it paid the sum early.

The repayment came in line with the commitment made by SBP governor Jameel Ahmad, who had said a week earlier that Pakistan would repay the $1 billion international bond on December 2.

As per finance ministry officials, the early repayment helped evade the risk of a near-term default, although concerns linger over Pakistan’s ability to pay its long-term debt.

Pakistan needs to repay about $25 billion in the fiscal year 2022-23.

Earlier on Friday, Saudi Arabia extended the term for a $3 billion deposit it had made to Pakistan’s central bank, announced SBP.

“The SFD extended the term for the deposit provided by the Kingdom of Saudi Arabia in the amount of $3 billion to the SBP,” SBP said in a statement shared on its official Twitter handle.

The central bank said that the extension of the term of the deposit “is a continuation of the support provided by the government of Saudi Arabia to the Government of Pakistan.”

“The deposit (is) aimed to shore up the foreign currency reserves in the Bank and help Pakistan in facing the economic repercussions of the COVID-19 pandemic; it, furthermore, contributed to meet external sector challenges and achieve sustainable economic growth for the country,” said SBP.

It is pertinent to mention here that the deposit agreement between Saudi Arabia and Pakistan was signed in November, last year. Under this deposit agreement, the Saudi Fund for Development (SFD) placed a deposit of $3 billion with SBP.


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