Pakistan’s external financing gap could rise to $8bn: Morgan Stanley

The outlook for Pakistan is worsening, says Morgan Stanley in a report released on Friday. The country has “underperformed significantly since February”, with spreads widening up to 1250 basis points and some bonds selling for as low as sixty cents on the dollar. 

“The key driver has been rising concerns about Pakistan’s external funding gap” say the authors of the report. The deteriorating current account deficit, “increased risks to the IMF disbursements” and slowing remittances are principally responsible. “We expect total funding to be $35 billion for 2022” the report says.