Moody’s Investors Services raised serious concerns over Pakistan
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KARACHI – Moody’s Investors Service has issued a warning regarding Pakistan’s ability to obtain loans from bilateral and multilateral partners.
The credit company stated that this ability will be severely limited until a new agreement is reached with the International Monetary Fund (IMF). The report suggests that it is unclear whether Pakistan will participate in another IMF program until after the upcoming elections, which are scheduled for October 2023. Even if negotiations for a future IMF program are successful, they are expected to be time-consuming.
Furthermore, Moody’s cautioned that Pakistan is unlikely to access affordable market financing from Eurobonds or commercial banks in the foreseeable future. In the fiscal year 2023, the government failed to issue any Eurobonds and only managed to raise Rs521 billion ($2.8 billion) from commercial banks, significantly below the Rs1.4 trillion target set in the budget for the fiscal year 2022-23.
The report also highlighted the challenges Pakistan faces in terms of high external debt repayments in the coming years. In fiscal 2024, the country is expected to repay approximately $25 billion in principal and interest. Additionally, Pakistan’s foreign exchange reserves are currently at a very low level of $3.9 billion as of June 2.
Moody’s emphasized the uncertainty surrounding Pakistan’s external funding prospects for fiscal 2024 and beyond. It expressed doubts about the country’s ability to secure the budgeted $2.4 billion from the IMF.
