Pakistan faces cash flow squeeze as exports slow ahead of oil and Eurobond payments

Pakistan’s export sector has slowed over the past two weeks amid preparations for a heavy oil import payment and more than $1 billion in Eurobond repayments due after Eid-ul-Fitr next week, according to weekly commentary by financial platform Tresmark.

The report said the country is expected to make both payments on time without disrupting the inter-bank rupee-dollar parity, supported by healthy foreign currency inflows, including Ramadan-related remittances.

Under the $7 billion IMF programme, Pakistan continues to manage imports within resources generated by export receipts and workers’ remittances. Tresmark said the country is unlikely to draw down reserves to defend the rupee, keeping short-term parity range-bound, though gradual depreciation may occur over the medium term as the outlook remains uncertain.

“Export inflows have slowed somewhat over the last two weeks. At the same time, import payments appear deliberately staggered so the inter-bank market remains broadly square on any given day. This helps reduce undue pressure on the rupee,” the report said.

The platform flagged two major upcoming cash flow pressures: a heavy oil import cycle immediately after Eid and more than $1 billion in Eurobond repayments due in April 2026. Tresmark warned these could widen the current account deficit, increase fiscal strain, and reduce policy flexibility.

Rising fuel prices—petrol and diesel increased by Rs55 per litre last week—are expected to keep inflation expectations high, sustaining elevated interest rates, putting renewed pressure on the currency, and dampening growth momentum, the report noted.

Remittances have historically cushioned Pakistan through crises, but the report cautioned that slower labour demand in Gulf economies could weaken inflows, adding domestic economic pressure. Tresmark described this as a “slow-burn risk” capable of reshaping Pakistan’s macroeconomic trajectory.

Global financial conditions are also tightening. Pakistan’s Eurobond yields and credit default swaps (CDS) have widened by roughly 100 basis points, signalling increased external investor risk perception. This could raise the cost and uncertainty of market-based financing, constrain access to Eurobond or Panda bond markets, and limit foreign direct investment and portfolio inflows.

Tresmark concluded that Pakistan’s short-term stability will rely on careful import management, sustained remittance inflows, and the country’s policy credibility and multilateral engagement for external financing. The rupee is likely to remain range-bound in the coming weeks, with medium-term outlook less predictable.