Pakistan needs $24 billion in FY24 for external debt payments to avert default
Shares
SBP Governor Jameel Ahmad announced on Thursday that Pakistan's total external financing requirement for the fiscal year FY24 amounts to $24.6 billion, encompassing interest payments of $3.4 billion and principal repayments of $21 billion. Nonetheless, Governor Ahmad noted that a substantial portion of this sum, specifically $2.8 billion ($2.2 billion in principal and $0.6 billion in interest), has already been settled.
Additionally, the central bank has secured commitments for rollovers totaling $8 billion, with an expectation of an additional $3 billion to be rolled over. Consequently, the net payable amount for the remainder of FY24 stands at $8 billion.
Governor Ahmad outlined the target for the current account deficit (CAD) in FY24, aiming for a range of 0.5% to 1.5% of the Gross Domestic Product (GDP). Furthermore, he highlighted that the CAD for August is projected to be $160 million, a significant improvement over previous estimates.
It's worth noting that all quantitative targets set by the International Monetary Fund (IMF), including those related to Net Domestic Assets (NDA), swaps, and net international reserves, have been achieved. The success in meeting these targets now places the government's focus on fulfilling the remaining performance criteria, such as managing the primary budget deficit, government guarantees, and targeted cash transfers.
The SBP attributed the recent T-bill auction, in which cutoff rates exceeded the policy rate, to a backdrop characterized by economic uncertainty, the depreciation of the Pakistani rupee, and market expectations of a potential policy rate hike. Contrary to market expectations, the central bank decided to maintain the policy rate at 22 percent, highlighting the need for stability and cautious monetary policy in the current economic climate
