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HomeNationalPakistan expected to avoid default in six months: Bloomberg

Pakistan expected to avoid default in six months: Bloomberg

IMF might refuse final $2.6 billion but this would be doubtful, report expects Fund to release tranche by end of June

According to a report released on Monday by Bloomberg Economics, Pakistan has been expected to avoid default over the next six months, although its problems were not yet resolved.

Ankur Shukla, who covers South Asia for Bloomberg, has said that the IMF will provide assistance to the nation through the end of June.

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The article continued arguing that Pakistan was in need of additional foreign help but investors were now concerned about a major dollar debt due in April 2024 and were pricing those bonds at a distressed level. Reports have claimed that the bond was currently selling at a 46 percent discount.

Pakistan now possesses $5.6 billion in foreign exchange reserves which is sufficient to meet its financial demands for the ensuing five months. The amount should increase to $14.9 billion with external help, the report said.

Amidst rapidly diminishing foreign exchange reserves falling rupee and deteriorating macroeconomic indicators Pakistan has been experiencing severe economic turmoil. The State Bank of Pakistan (SBP) will likely report reduced foreign exchange reserves this week as a result of the $1 billion in repayments it made over the weekend.

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The IMF might still refuse to release the final $2.6 billion in loan tranches but considering the country’s dire need following the floods of last summer this would be doubtful, the report stated.

Resuming the IMF program was critical for the nation, according to experts. “Again we believe these revenues will materialize. These funds will assist in covering $5.9 billion in debt payments and anticipated account deficits until the end of the fiscal year ending in June.”

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