Despite Pakistan and the International Monetary Fund (IMF) reaching a standby arrangement (SBA) last week, Fitch Ratings sees lingering risks to Pakistan’s financing abilities.
Fitch sees risks to Pakistan’s financing abilities with the country starring at debt repayments of $25 billion in the current fiscal year (FY24).
“Pakistan will require significant additional financing besides the IMF disbursements to meet its debt maturities and finance an economic recovery,” said Bloomberg quoting Krisjanis Krustins, director of sovereigns for APAC at Fitch.
“While the IMF likely sought and received assurances for such financing, there is a risk that this could prove insufficient, particularly if current account deficits widen again.”
Last week, the IMF announced reaching a staff-level agreement (SLA) with Pakistan on a $3 billion “standby arrangement”. The staff-level agreement is subject to approval by the IMF Executive Board, with its consideration expected by mid-July, said the statement issued by the IMF.
IMF’s nod resulted in the Pakistan Stock Exchange (PSX) registering its highest single-day gain on Monday with the benchmark KSE-100 index rising more than 2,400 points. The rupee also appreciated in the open market, gaining as much as Rs. 5 against the US Dollar and dollar bonds extending their best run ever.
