Pakistan is facing a substantial debt servicing burden of $25 billion during the current fiscal year, as revealed in a briefing to analysts by the State Bank of Pakistan (SBP). The repayment obligation comprises $3.3 billion in interest payments and slightly over $21 billion in principal repayments.
While approximately $11.3 billion is expected to be rolled over, $5.3 billion has already been confirmed for rollover. The SBP emphasized that the country’s reserves have improved to a comfortable position of $8.2 billion, with expectations of surpassing $10 billion by the end of FY24, thanks to recent inflows from the IMF and friendly countries.
To meet the anticipated repayable amount of $8.5 billion to $9 billion, the SBP plans to secure financing primarily through multilateral funding sources, with a significant $1.8 billion expected from the IMF upon the successful completion of the remaining two reviews of the Stand-By Arrangement (SBA). Additionally, authorities intend to raise commercial borrowing as part of their repayment strategy.
Despite the challenging debt situation, the SBP has affirmed its commitment to honor debt obligations under agreed-upon payment schedules. There are no plans to restructure the external debt, and the central bank will gradually phase out concessional schemes, adhering to its commitment to the IMF.
The situation requires prudent financial management and efforts to attract funding from various sources to ensure stability and sustainability in managing the debt burden.
Managing the significant debt burden remains a critical challenge for Pakistan, requiring careful financial planning and resource mobilization. The country’s efforts to secure financing from multilateral sources like the IMF and exploring commercial borrowing options indicate a commitment to fulfilling its debt obligations responsibly.