Pakistan faces $3.7 billion of debt payments starting this month, Fitch Ratings said, putting pressure on the government to convince the International Monetary Fund (IMF) for a bailout as soon as possible, reported Bloomberg.
Hong Kong-based Fitch director Krisjanis Krustins in an emailed response told Bloomberg that $700 million is due in May while another $3 billion will mature in June.
Fitch anticipates that $2.4 billion in Chinese deposits and loans will be rolled over.
“Our base case is still that Pakistan and the IMF will reach an agreement on the program review,” Krustins said but noted that risks remain significant and the rating downgrade in February reflected that a default or debt restructuring becoming an increasingly real possibility.
Pertinently, Pakistan is frantically trying to avoid a default on debt repayments as the country’s reserves dwindle and has been negotiating a $6.5 billion bailout with the IMF for about six months. The country obtained financing from countries in the Middle East and China, which was a critical IMF condition, but the lender hasn’t offered anything definitive on when it will disburse cash for the South Asian economy.
Understandably, investor concerns over the country’s debt repayment issues are spelling trouble for Pakistan. There’s still hope that the resumption of the IMF program will help the country avoid default blushes.
On the surface, Pakistan’s debt repayment issues in the next few months suggest a money crunch is likely. The recent junk classifications of Pakistan’s bonds by Fitch and Moody’s have stoked concerns over the government’s ability to repay and service its debt.
