Islamabad [Pakistan], October 13 (ANI): The International Monetary Fund (IMF) has raised concerns over Pakistan’s ability to repay its external debt, labeling it as “fragile”, Geo News reported.
According to the IMF, Pakistan’s external financing requirements are projected to reach USD 62.6 billion over the next three years under the Extended Fund Facility (EFF) program. This amount is expected to further increase to USD 110.5 billion over a five-year period, from 2024-2025 to 2028-2029.
Pakistan’s external funding needs are estimated to be USD 18.813 billion for the current fiscal year, increasing to USD 20.088 billion in 2025-2026 and USD 23.714 billion in 2026-2027. Even after the three-year program concludes, finance demands will remain high, with USD 24.625 billion required in 2027-2028 and USD 23.235 billion in 2028-2029.
This development comes as Pakistan struggles to manage its debt burden, sparking concerns about the country’s ability to secure additional loans from foreign financial institutions.
Further, the IMF issued a warning, saying that Pakistan’s ability to repay debts is subject to “major risks” and “heavily hinges on” the implementation of policy and timely external financing, Geo News reported.
With purchases related to the request, the Fund’s exposure would reach Special Drawing Rights (SDR) 6,816 million (336 per cent of quota) by September 2024.
“Exceptionally high risks notably from high public debt and gross financing needs, low gross reserves and sociopolitical factors could jeopardise policy implementation and erode repayment capacity and debt sustainability,” it added.
Restoring fiscal and external viability is critical to ensure Pakistan’s capacity to repay the Fund.
This depends on strong and sustained policy implementation, including, but not limited to fiscal consolidation and external asset accumulation, as well as decisive reforms to enable stronger and more resilient economic development.
On September 25, the Executive Board of the International Monetary Fund (IMF) authorised Pakistan’s 37-month Extended Fund Facility (EFF) agreement, which is valued at around USD 7 billion. (ANI)
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