Pakistan to repay $4.33bn in debt servicing in last quarter of FY2024

ISLAMABAD: The newly sworn-in Minister for Finance Muhammad Aurangzeb will have to manage heavy external debt servicing repayments of $4.33 billion during the last quarter (April-June) period, including $1 billion on account of the maturity of international bond.

Pakistan will also have to pay back $1 billion to China as Chinese SAFE deposit during the last quarter of the current fiscal year. Now the prime minister will have to send another request to the Chinese side for granting rollover on a $1 billion SAFE deposit for another year.

The minister for finance and revenues chaired a high-level meeting at the Finance Division on Tuesday to ascertain the situation of external financing in the context of the upcoming IMF review talks scheduled to be held from March 14 to 18, 2024 here in Islamabad. The 10-year sovereign bond, called the Pakistan Government International Bond, worth $1 billion, will mature on April 15, 2024, meaning the government will return the borrowed money to investors.

The government will have to pay back $32.88 million to commercial banks in the last quarter of the current fiscal year in principal and interest repayments. The government is also bound to repay $706 million to all bilateral creditors during the last three months of the current fiscal year, including $218 million to Japan, $149 million to France, $48 million to Korea and several other countries.

Pakistan will also have to repay $1.232 billion to commercial banks during the last quarter of the current fiscal year. The country will have to pay back $265 million to the IMF as principal and interest repayment in the last quarter of the current fiscal year. The Naya Pakistan Certificates-related repayments will be standing at $66 million in the last quarter of the current financial year.

Besides, the government will have to pay back $754 million to multilateral creditors as external debt servicing repayments and the largest chunk of debt repayments will be given to the Asian Development Bank (ADB) to the tune of $406.8 million in the last quarter of the current fiscal year, and also WB’s IDA lending of $185.3 million and others.

The foreign exchange reserves held by the State Bank of Pakistan stood at $7.8 billion on March 1, 2024, which had declined from $8.1 billion in July 2023. Despite entering into an SBA arrangement with the IMF, the foreign exchange reserves held by the SBP could not be built up in the wake of heavy debt repayments of both principal and interest repayments. Under the SBA programme, the country committed to build up a buffer of raising the foreign exchange reserves but foreign inflows could not be managed up to the desired mark so far in the current fiscal year, making it hard to shore up the dwindling reserves.