ISLAMABAD: Pakistan is faced with a significant challenge ahead as the country is to repay huge amount of to $27.47 billion in foreign debt by November 2024, which includes both the principal loans as well as interest costs.
According to the SBP data, Pakistan is obligated to repay $23.83 billion in foreign debt and an additional $3.64 billion in interest payments from December 2023 to November 2024. The bank’s latest update, issued on Wednesday, said that $4.29 billion in debt and interest costs had to be paid in December 2023 alone.
As per the data, Pakistan must fulfill payments of 3.47billion in January and February, and a further19.71 billion is due from March to November. This places a considerable strain on the country’s finances and raises concerns about its ability to meet these obligations without further assistance.
Financial experts are of the view that the country’s reliance on IMF loans to manage its debt obligations is a matter of concern, as it indicates a fragile economic situation. The rollover of a portion of the debt and the confirmation of a significant amount by creditors provide some relief, but the need for continued borrowing raises questions about the sustainability of Pakistan’s debt situation”, they added.
The experts emphasized that given the complexity of international finance and the potential impact on Pakistan’s economy, it’s crucial for the government to work towards a sustainable long-term solution to manage its debt and ensure economic stability. This may involve implementing structural reforms to boost revenue generation, reduce reliance on external borrowing, and improve fiscal management.
Furthermore, the anticipated next IMF loan program is expected to provide a critical safety net to bridge the projected current account deficit. However, continued reliance on such loans underscores the need for Pakistan to address underlying economic challenges and work towards achieving self-sufficiency in managing its debt and financial obligations.
