ISLAMABAD/KARACHI: Pakistan’s central bank said it made the payment for a $1 billion bond on Friday, dodging the risk of a near-term default even as worries linger over its ability to pay its long-term debt, Bloomberg reported.
The nation transferred the payment on the sukuk dollar bonds due Dec 5 three days before its maturity to Citigroup Inc., which will distribute the funds onward to creditors, said Abid Qamar, a spokesperson at State Bank of Pakistan.
The notes climbed to 98.9 cents on the dollar Friday, marking a nearly 16-cent comeback from a record low of 83 cents in October, according to indicative pricing data compiled byBloomberg.
Meanwhile, Saudi Arabia extended the term of $3 billion it made to Pakistan’s foreign exchange reserves to support the cash-strapped nation amid a lack of external financing.
“The Saudi Fund for Development (SFD) extended the term for the deposit provided by the Kingdom of Saudi Arabia in the amount of $3 billion to the State Bank of Pakistan,” the central said in a statement.
“The extension of the term of the deposit is a continuation of the support provided by the government of the Kingdom of Saudi Arabia to the Islamic Republic of Pakistan, as the deposit aimed to shore up the foreign currency reserves in the Bank and help Pakistan infacing the economic repercussions of the COVID-19 pandemic,” the SBP added.
This assistance has contributed to meeting external sector challenges and achieving sustainable economic growth for the country, it noted. The deposit agreement was signed in November 2021.
The Kingdom’s latest support arrived as the country was set to pay back a $1 billion Sukuk bond on December 2. This will help avoid the prospect of a short-term default even as concerns about its ability to make long-term debt payments persist.
Analysts said the extension in the tenure of the Saudi deposits was already agreed upon in September 2022. “The real benefit will come if an additional $4.2 billion [Saudi] package materialises, which the FM [finance minister] indicated earlier,” said Fahad Rauf, the head of research at Ismail Iqbal Securities.
China and Saudi Arabia pledged Islamabad a $13 billion financial package last month. Ishaq Dar, the minister of finance, stated that he had asked Saudi Arabia to increase its current $3 billion cash deposit to $6 billion. He added that he also wanted the oil financing facility to be doubled, to $2.4 billion.
Pakistan has been in desperate need of external funding as it awaits the International Monetary Fund’s ninth review of a $7 billion bailout package. The country requires $32-34 billion this fiscal year to meet its foreign debt and trade-related obligations.
A local brokerage house revealed citing data from the SBP that the country is scheduled to repay $26.3 billion in foreign debt and debt servicing over the course of 12 months (November to October).
The nation’s foreign reserves have been dwindling at a faster pace. This is in spite of disbursements from the IMF and the Asian Development Bank in recent months. The government has been controlling imports through administrative measures to fight a dollar crunch.
The reserves with the SBP stood at $7.5 billion as of November 25. The reserves cover about one month of imports.
The government is nevertheless optimistic that the recent financing of $500 million from the Asian Infrastructure Investment Bank and inflows in the pipeline from friendly countries and other international financial institutions will assist boost the foreign reserves.
DUBAI: PML-N Senior Vice-President Maryam Nawaz met a delegation of Muslim League United Arab Emirates in Dubai last...
ISLAMABAD: Nine constituencies of Karachi, one seat of Multan, one of Islamabad would see interesting contest on March...
MOSCOW: Independent Russian oil refiner Forteinvest has clinched a deal that will see Russian gasoline being sent to...
ISLAMABAD: In his new rhetoric against the establishment, Pakistan Tehreek-e-Insaf General Secretary Asad Umar said...
ISLAMABAD: Pakistan Tehreek-e-Insaf and Awami Muslim League Friday challenged in the Supreme Court the appointment...
ISLAMABAD: The Central Development Working Party has approved seven development projects worth Rs22.16 billion during...