According to the State Bank of Pakistan, Pakistan has paid off $1 billion out of $2 billion collected by the former government in 2014 by issuing five-year and 10-year Eurobonds.
The bonds were issued in April 2014 and were criticized by economists owing to the high rates offered against them. The coupon rate offered on the five-year bonds was 7.25 percent; while on the 10-year bonds, it was 8.25 percent.
At that time, the rate was too high given the lack of risks faced by the country’s economy. Nevertheless, the SBP spokesperson said that the outflow of $1 billion will be reflected in the next weekly report of the country’s foreign exchange reserves.
Notably, last week’s foreign exchange reserves amounted to $17.228 billion including $10.272 billion of State Bank and $6.956 billion of commercial banks.
In order to prevent a balance of payment crisis, the government has obtained funds from bilateral sources in the last eight months. The borrowed funds include 15 billion Yuan ($2.2 billion) from China last month.
Pakistan has been facing a balance of payment crisis for past several years. However, the recent bilateral funds from Saudi Arabia, the UAE, and China have helped alleviate the situation, raising the country’s reserves to $18.9 billion.