Situationer: Is Pakistan poised for default in FY24?
WITH dangerously low foreign exchange reserves and a steep debt repayment schedule looming for fiscal year 2024 that begins in July, Pakistan is facing a stark prospect of potential default or even a larger balance of payments crisis in the 12 months ahead. Data obtained unofficially from a senior source privy to the country’s debt repayment schedule shows Pakistan faces $8.7 billion outflows on public debt payments in FY24 (including principal and interest) that are not subject to rollover. On top of this, there is another $5bn approximately on private debt outflows as per the IMF staff report released in September 2022, bringing the total to $13.7bn in debt-related payments. Repayments on account of publicly guaranteed debt are on top of this. The monthly schedule of outflows as per this government data is shown in the attached graphic. Assuming zero current account deficit, all rollovers going smoothly, debt payments made on time and no external financing support, the data shows State Bank’s foreign exchange reserves going negative by December of this year.