KARACHI: The country’s external debt servicing in the first quarter (July-September) of FY19 touched $2.452 billion, as per data released by the central bank.
According to State Bank of Pakistan’s data, the government paid off $1.9 billion as principal and $0.55 billion as interest accumulated on the total debt, reports Dawn.
Also, the government is in a spot of bother as the country’s debt servicing linked needs are projected at $9.3 billion during the ongoing FY19.
A borrowing target of $12 billion has been set for FY19 by the Finance Minister Asad Umar to meet the swelled current account deficit.
Procuring more loans, will only add to the debt pile and lead to higher debt servicing costs which have chewed up $7.5 billion of Pakistan’s foreign exchange reserves in the previous FY18.
According to a report in The News last month, data obtained from various ministries revealed Pakistan requires to make debt servicing repayments of over $1.7 billion in form of principal and markup on outstanding foreign loans in the 2nd quarter of current FY19.
According to finance ministry projections, Pakistan will have to repay around $700 million to multilateral creditors, $400 million to bilateral creditors, $76 million to the IMF, $298 million in shape of commercial loans and $200 million due to bond repayments in October-December period.
Moreover, the Asian Development Bank (ADB) is going to be repaid $129 million, $65 million to the International Bank for Reconstruction and Development (IBRD), $102 million to the International Development Association (IDA), $24 million to the Islamic Development Bank (IDB).
Also, $1 million each are to be paid to the Organization of the Petroleum Exporting Countries Fund and International Fund for Agriculture Development (IFAD).
During the current months, the government will repay $572 million as principal and $146 million as interest payment on loans obtained and repay $34 million to the IMF too.
As per projections of the International Monetary Fund, the country’s external debt servicing needs were determined at over $19 billion by 2023.
Islamabad is presently in process of negotiating with the IMF and reach a bailout agreement by mid-January next year, but the talks stalled over the pace of reforms and have been extended.
Furthermore, talks held between both the sides via video conference on Thursday saw the IMF demanding further adjustments in the exchange rate and monetary policy.
Also, the IMF called for 22% further hike in power tariff to address the problem of circular debt.
Pakistan has requested China, Saudi Arabia and the United Arab Emirates for financial assistance to arrange the needed $12 billion.
