Moreover, a nod from the IMF will help unlock financing worth $5 billion from bilateral creditors and $1.7 billion from the World Bank. All these funds will help cover debt payments worth $5.9 billion and estimated twin deficits by the end of the ongoing fiscal year 2022-23.
However, a billion-dollar question that remains unanswered is how will Pakistan get through the 12 months after that when the country would need at least a total of $11 billion* in financing – including an $8.8 billion estimated current account deficit and $2.2 billion in external debt repayments, among these a $1 billion dollar bond maturing in April 2024.
Currently, Pakistan has $5.6 billion in foreign exchange reserves – enough to cover the next five months of funding needs. The publication reported that external aid should boost the number to $14.9 billion. This should cover dollar payments only through March 2024 – leaving the April bond repayment in question. The risk of default is why Pakistan’s bond due in April 2024 is trading at a 46% discount. The market’s risk assessment suggests the country will have to seek more external aid from the IMF and/or other creditors.
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