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Wednesday, May 22, 2024

Pakistan Successfully Repays $1 Billion International Bond

Pakistan successfully repays $1 billion international bond, demonstrating financial resilience amidst stabilization of foreign exchange reserves and anticipation of IMF assistance for economic recovery and ongoing reforms.

Pakistan achieved a significant financial milestone as it successfully executed the repayment of a $1 billion International Bond on April 12, 2024, as confirmed by the State Bank of Pakistan (SBP). The payment, comprising both principal and interest, was made to the agent bank for further distribution to the bondholders, marking a crucial step in the country’s financial obligations on the international stage.

With this repayment, Pakistan’s total outstanding international bonds and Sukuk amount to $6.8 billion, representing 6.8% of its public external debt. However, the country’s next maturity is anticipated in September 2025, amounting to $500 million, indicating ongoing financial responsibilities that require careful management and planning.

Financial Resilience and IMF Assistance

Despite the significant repayment, Pakistan’s foreign exchange reserves have demonstrated resilience, with recent weeks witnessing stabilization. As of March 29, reserves held by the SBP increased by $19 million weekly, reaching $8.04 billion. The country’s total liquid foreign reserves, including commercial banks’ holdings, stood at $13.38 billion, with net foreign reserves by commercial banks amounting to $5.34 billion, reflecting a balanced financial position.

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Following the repayment, Pakistan’s SBP-held reserves are expected to decline to approximately $7 billion. However, the country anticipates a subsequent inflow from the International Monetary Fund (IMF), following the staff-level agreement on the second and final review of the $3 billion Stand-By Arrangement (SBA). The anticipated funds of around $1.1 billion from the IMF’s approval would provide crucial support to Pakistan’s financial stability and economic resilience.

The successful completion of Pakistan’s existing IMF programmhttps://www.jasarat.com/en/pakistan-repays-1bn-in-eurobonds-sbp/e signals progress towards economic recovery and stability. IMF chief Kristalina Georgieva acknowledged Pakistan’s improved economic performance and highlighted the commitment to address key challenges, including expanding the tax base, enhancing transparency in public spending, and promoting equitable economic contributions. The IMF’s continued engagement and potential for a follow-up programme underscore the importance of ongoing reforms to foster sustainable economic growth and resilience in Pakistan.