Cash-strapped Pak faces $100 bn loan repayment in four years

PTI, Islamabad: Cash-strapped Pakistan is facing the daunting task of repaying a staggering $100 billion external debt over the next four years, the government has said, an amount which is nearly 10 times its current $9.4 billion foreign exchange reserves. The $100 billion external debt repayments from 2024 to 2027 are exclusive of any payments on account of the liabilities booked at the balance sheet of the central bank and the requirements for financing the current account deficit, according to a report published in The Express Tribune newspaper on Friday. "Pakistan's external debt repayments for four years are $100 billion," Minister of State for Finance Ali Pervaiz Malik said at a meeting of the National Assembly Standing Committee on Thursday.

However, "the debt stock can easily be financed through rollovers or replacement of the existing debt with new one," Malik was quoted as saying by the newspaper. Malik's statement underscores that the government does not have a viable plan for paying back these loans except to request the lenders every year to defer the payments for one more year, it said. The $100 billion external debt repayments by the federal government are 10 times more than the current $9.4 billion gross official foreign exchange reserves, the paper said. Director General Debt, Mohsin Chandna, told the Committee that the rollovers are mainly from Saudi Arabia ($5 billion), China ($4 billion), UAE ($3 billion), and Kuwait ($700) million. The gover nment's strategy to remain afloat by securing the rollovers has already started backfiring and also led to a significant delay in securing the International Monetary Fund (IMF) board meeting date, according to the paper.

The International Monetary Fund (IMF) board is now scheduled to approve a 37-month Extended Fund Facility programme worth $7 billion to Pakistan on September 25 after these creditors finally assured to rollover the debt but only for one year.