WASHINGTON: Top global rating agencies alarm that Pakistan will require more funds than what it’s receiving from the International Monetary Fund (IMF) to meet its debt liabilities and to finance its economic recovery, according to a report published by Bloomberg.
Moody’s Investors Service and Fitch Ratings observed Islamabad has to repay $25 billion in the current fiscal year to meet its debt obligations. The repayments include both principal and interest, and are about seven times Pakistan’s foreign exchange reserves. The debt obligations are much more than the initial approval of a $3bn IMF loan Pakistan secured last week. The programme is still subject to approval by the IMF Executive Board.
“Pakistan will require significant additional financing besides the IMF disbursements to meet its debt maturities and finance an economic recovery,” said Krisjanis Krustins, director of sovereigns for Asia and the Pacific region at Fitch.
Bloomberg, an international financial wire, has said the IMF programme has “sent a positive wave through the markets, with stocks surging the most in 15 years on Monday and dollar bonds extending their best run ever.”
Pakistan increased taxes, hiked key interest rates to an all-time high, and cut spending to secure the initial pact with the IMF. “It is not clear the Pakistani government will be able to secure full $3bn of IMF financing during the nine-month Stand-By Arrangement,” Grace Lim, an analyst with Moody’s told Bloomberg. The government’s commitment to implement reforms will be tested as it goes into elections due by October, she said.
