Pakistan is scheduled to repay nearly $22 billion in foreign debt andinterest over the next 12 months in order to avoid default, as per datafrom the State Bank of Pakistan (SBP).
According to a report by Express Tribune, it has been strongly suggestedthat following the successful resumption of the International Monetary Fund(IMF) program, Pakistan should commence discussions with bilateralcreditors and partner countries on ways to restructure its foreign debt.
According to the central bank data, Pakistan is expected to repay a totaldebt of $21.95 billion in the next one year. This translates into $19.34billion in principal and a further $2.6 billion in interest on the debt. Adeeper dive into the data shows that Pakistan has to pay $3.95 billion inone month, another $4.63 billion in the next three months, and a further$13.37 billion in the final eight months of the period under review.
Pakistan has to repay approximately $80 billion in foreign debt over thenext three and a half years (from February 2023 until June 2026).Meanwhile, the country’s foreign exchange reserves have been depleted tojust $3.1 billion, which is less than a three-week import cover.
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According to Arif Habib Limited (AHL), Pakistan can get a lot of breathingspace from its external debt obligations by opting for debt re-profilinginstead of restructuring. Following the imminent arrival of the IMF bailoutsoon enough, the re-profiling of billions in short-term bilateral andcommercial debt from friendly countries is a less disruptive option toeffectively create some breathing space and put the economy back intorecovery mode.
