Cash-Strapped Pakistan To Repay $1 Billion Next Week, 3 Days Before Deadline

Pakistan's central bank chief said on Friday that the cash-strapped country would repay a USD 1 billion international bond on December 2, three days before its due date. 

Jameel Ahmad, Governor of the State Bank of Pakistan (SBP), said this at a briefing, according to sources privy to the development.

The bond repayment of USD 1.08 billion is maturing on December 5 and there is fear due to the prevailing economic difficulties that Pakistan may default on the external liabilities.

Giving details of the payment, Ahmad said that the funding had been arranged through multilateral and bilateral sources including an immediate inflow of USD 500 million next week on Tuesday from the Asian Infrastructure Investment Bank.

The governor highlighted that despite payments of USD 1.8 billion in November, the foreign exchange reserves were stable. Data showed that the central bank had USD 7.8 billion on November 18, but it is hardly enough for a month's imports.

Ahmad, however, hoped that the situation would improve and the country would be in a far better position by the end of the financial year in June 2023.

Pakistan's economic situation remains fragile with the balance of payment being one of the key worries. Raging inflation and difficulties to expand the tax revenues are also among the major issues.

The SBP has raised its key policy rate by 100 basis points to 16 per cent in a bid to control the rising prices but it will further squeeze the financing needs of the private sector.

Part of the economic problems was due to the political instability triggered by the delay in the appointment of the new army chief.

Since the appointment has been made, it is believed that political uncertainty will decrease, giving confidence to the business community.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)