Pakistan Needs to Pay Back Loans of $2.575 Billion in May-June

During the last two months (May-June) of the ongoing fiscal year 2018-2019, Pakistan will have to $2.575 billion to international lenders in the shape of principal and interest payments on its loans – amidst negotiations with IMF on a fresh bailout package of $6.4 billion.

IMF has estimated that Pakistan, over the next two years, will have to make repayments on its loans worth $27 billion and with declining foreign currency reserves, the government’s negotiating position on the bailout has weakened.

The major chunk of the $2.575 billion repayments is the short-term commercial loans of over $1.647 billion. According to The News, in May (2019) alone a commercial loan repayment of $840 million is due.

Friendly countries like China, Saudi Arabia, and UAE, lent $9 billion in the form of dollar inflows during this fiscal year but despite this, as of 2nd May, the reserves stand at $8.8 billion after they fell by $219 million the reported week by the central bank.

$4 billion was provided by China half of it as a deposit and the other half as a commercial loan, $3 billion was provided by KSA in the shape of deposits whilst the UAE provided $2 billion as a deposit. Another $1 billion was promised by the UAE but it will not be provided during the current fiscal year. $5.8 billion was received by Pakistan in the form of loans and grants during the first three quarters of the ongoing fiscal year, according to The Economic Affairs Division (EAD).

If there are no substantial inflows in these last two months, the foreign currency reserves held by SBP will take a hit after the $ 2.575 billion is repaid. In May 2019, $810 million needs to be repaid as principal amount and $30 million as interest on Pakistan’s commercial loan.

Meanwhile, in June (2019) $767.04 million will have to be repaid as principal amount and $40.36 million as interest on a commercial loan. Pakistan will have to pay back Japan $157.45 million and $194.46 million in May 2019 and June 2019, respectively on the account of Paris Club countries. Whilst in May 2019, the loan repayment stood at $78 million, $61 million and $45.02 million to France, US and Germany, respectively.



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