State Bank of Pakistan (SBP) Governor Jameel Ahmad quickly dispels notions of a possible bilateral debt restructuring on Monday, addressing speculations from Finance Minister Ishaq Dar’s previous statement.
In a briefing with analysts, Governor Ahmad firmly stated, “As of now, there is no plan to enter into any debt restructuring. Absolutely no doubt about it. We are not considering any such plan, so there is no question of what will be the haircut..”
His comments came in response to Finance Minister Dar’s announcement following the presentation of the FY2024 federal budget. Dar had hinted at a possible restructuring of bilateral debt, irrespective of the outcomes of the ongoing IMF review.
Pakistan’s Position on Debt Restructuring
Ahmad specified that the lion’s share of the nation’s debt is bilateral and multilateral, and significant amounts of commercial debt have been cleared, with Eurobonds slated for payment when due.
Out of a total external repayment sum of $3.6 billion due this month, $0.4 billion has already been dealt with. $2.3 billion will be rolled over, with the remaining $0.9 billion requiring financing.
The total debt obligations for FY2024 are estimated to be around $23 billion, as per the SBP. This figure is expected to be split evenly across the fiscal year’s four quarters.
Ahmad revealed that the SBP is contemplating ways to fund this debt, with considerations hinging on the outcomes of the IMF review, among other factors. The Governor expressed optimism about ongoing discussions with the IMF and expects a conclusion soon.
Further, the SBP Governor estimated that the government would receive a transfer of Rs1 trillion in FY2024, profits earned by the SBP after withholding a specified portion.
Predicting the current account deficit (CAD) for FY2023 to cap at around $3.5 billion (or, at worst, $4 billion), he attributed the expected figures to policy-induced import restrictions and the available liquidity from exports and remittances. The CAD for FY2024 is also projected to stay under the $4 billion mark.
Ahmad also mentioned that the timing for the issuance of Eurobond would be dictated by the government, considering market fundamentals and credit ratings.
