Due to Pakistan’s obligation to repay $10.35 billion in foreign debt servicing through the end of December 2023, there is a possibility that payments on its external debt may not be made in full during the first six months of the year (July–Dec).
In the event that the IMF program is not revived by the end of June 2023, Pakistan needs emergency infusions of $4 to $6 billion to prevent a balance of payments crisis, including the repayment of external debt and commitments.
Pakistan To Repay Foreign Debt
According to the information that was made accessible, the nation would be required to pay $3.79 billion in principal and interest repayments in the first fiscal quarter (July-September) beginning on July 1, 2023.
In the second quarter (Oct.-Dec.) of fiscal year 2023–24, Islamabad’s obligations to service its foreign debt will increase to $6.568 billion.
Pakistan needs to pay back $1.219 billion in Eurobond principal and interest during the second quarter (Oct.–Dec.), totaling $1 billion in principal and $219 million in interest.
When contacted, a senior ministry of finance official stated that out of over $10.3 billion, deposits totaling $4 billion would be rolled over, with $1 billion coming from China in July 2023 and the remaining $3 billion coming from the Kingdom of Saudi Arabia in the second quarter (Oct-Dec) timeframe.
It is hoped that these friendly nations will roll over their $4 billion deposits to Islamabad.
Islamabad will have to manage the remaining loan repayment obligations of $6 billion despite declining foreign exchange reserves.
According to information on foreign loan repayments, Pakistan would have to pay China $363 million under guaranteed debt, including $280 million in principal and $83 million in interest payments, in the first quarter of the following fiscal year.
In the first quarter (July-Sept.) of the following fiscal year, Pakistan was required to pay back a total of $1.05 billion in bilateral debt, of which Islamabad was responsible for $15 million to France, $24.67 million to Japan, $0.6 million to Korea, $591 million to China, $6.5 million to Kuwait, and $2.29 million to the UAE.
In the first quarter of the following fiscal year, which begins on July 1, 2023, Pakistan will be required to repay Saudi Arabia $398.08 million in the form of a foreign loan.
Ironically, Pakistan would be required to pay $12 million in commitment fees to international creditors as a punishment.
Pakistan will pay back $72 million as interest on its Eurobond in the first quarter of the upcoming fiscal year.
In the first quarter of the following fiscal year, $84 million in commercial loan repayments will be made in the form of interest payments.
Pakistan will reimburse China $1.096 billion in the first three months of the upcoming fiscal year in the form of a SAFE deposit, with $1 billion being the principal and $96 million being the interest.
With the expectation that China will approve a rollover, this $1 billion SAFE deposit is due in July 2023.
In the first quarter of the following fiscal year, Pakistan would be required to pay back $30 million in interest on the deposit made by the Kingdom of Saudi Arabia.
In the first quarter of the following fiscal year, Pakistan will have to pay back a $235 million loan to the IMF, with $165.02 million going towards principal and $69.97 million going towards interest.
The government will pay back $93 million in principal and interest on Naya Pakistan Certificates over the first three quarters of the upcoming fiscal year.
In the first quarter of the following fiscal year, Pakistan will have to pay back $660.58 million in multilateral debt, including $298 million to the ADB, $9.23 million to the AIIB, $9 million to the unspent balance, $227.67 million to the WB’s IDA loan, $90.5 million to the WB’s IBRD, and $22.31 million to the IDB.
Pakistan will pay back $107.57 million for a short-term IDB loan during the first quarter of the current fiscal year.
In the first quarter (July-Sept.) of the next fiscal year, total repayments of major foreign loans totaled $3.79 billion, comprising principle payments of $2.99 billion and interest payments of $801.6 million.
According to official data, Pakistan would have to return the Chinese Commercial Bank $33.38 million during the second quarter (Oct.–Dec.) of the fiscal year 2023–24.
There will be $1.009 billion in total bilateral debt repayments to friendly nations.
In the second quarter of the following fiscal year, $33 million in commercial debt will be repaid.
The payback of the deposits made by the Kingdom of Saudi Arabia (KSA) will be in the amount of $3.03 billion, which consists of $30 million in interest repayment and $3 billion in principal deposits. The $3 billion in deposits are anticipated to be rolled over by KSA.
$228 million will be repaid to the IMF in the second quarter of the following fiscal year. The repayment for the Naya Pakistan Certificates will total $80 million.
In the second quarter of the following fiscal year, there will be $730.29 million in total foreign loan repayments to multilateral creditors. The amount of the IDB’s short-term loan repayment is $64.2 million.
Total external debt repayments will reach $6.568 billion in the second quarter of the following fiscal year, posing a major risk to the economy given that current foreign exchange reserves are only about $4 billion.
To read our blog on “SBP reserves record significant drop owing to repayment of foreign debt,” click here.