Pakistan needs to repay $24.8 billion in external debt during the current fiscal year, according to data from the State Bank of Pakistan (SBP) released on Wednesday.
The News reported that these payments are expected to be managed comfortably and on time due to better foreign fund inflows and moderate current account deficits.
The SBP’s data for fiscal year 2025 shows that Pakistan needs $4.98 billion in July, $2 billion in August and September, and $17.8 billion from October to June. This totals $24.8 billion in external payments for FY25.
Out of this $24.8 billion, $21.2 billion is for principal repayment and $3.6 billion is for interest payment.
This total is slightly less than the $26.2 billion mentioned by SBP Governor Jameel Ahmad earlier this week. He stated that $4 billion is for interest and $22 billion is for principal repayment. Of this, $16.3 billion is expected to be rolled over, leaving $10 billion to be repaid. $1.1 billion has already been repaid in July, leaving $9 billion for the rest of the fiscal year.
The SBP projects that its foreign exchange reserves will reach $13 billion by the end of FY25, up from the current $9.1 billion. They also believe that the quality of these reserves is better than in previous years.
Topline Securities noted that the amount due in August and September is only 8% of the total obligations for the year. With the IMF approval expected by the end of August, they believe that foreign exchange reserves will improve from the stagnant level of $9 billion.
Pakistan has seen over $500 million in dollar inflows in the last two and a half months, with foreigners investing in high-yielding Pakistani T-bills. The CEO of Topline Securities, Muhammad Sohail, said that the central bank has kept the benchmark interest rate at 19.5% because they expect inflation to be between 11.5-13.5%.
The SBP’s latest data comes as global rating agency S&P affirmed Pakistan’s long-term sovereign rating as ‘CCC+’, due to the country’s reliance on external aid amidst a prolonged economic crisis. Fitch recently upgraded Pakistan’s rating to ‘CCC+’ due to more available external funding under a new IMF deal.
In July, Pakistan secured a $7-billion bailout deal with the IMF to stabilize the economy, as the country was close to a sovereign default.
Pakistan is also in discussions with Saudi Arabia, the United Arab Emirates, and China to meet its financing needs under the IMF programme.
According to the SBP governor, Pakistan’s external position has improved significantly, with the current account deficit narrowing, reserves increasing through foreign exchange market operations, and the forward liability book of the SBP decreasing.
A large part of the short-term debt, especially $8 billion in commercial loans, has been repaid and replaced with long-term multilateral loans, easing concerns about debt sustainability.
The SBP has forecasted a moderate increase in imports, strong growth in worker remittances, and a projected current account deficit of 0-1% of GDP for FY25.
In FY24, profit and dividend repatriation amounted to $2.2 billion, a sevenfold increase compared to the previous year, due to the settlement of outstanding payments to foreign investors.
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