Fitch Ratings and Moody’s Investors Service on Monday warned of continued threats to Pakistan’s financial sustainability, despite the country receiving a much-needed $3 billion lifeline from the International Monetary Fund (IMF) over the weekend.
Pakistan signed a short-duration (nine-month) worth $3 billion loan programme with the IMF last week, following the revival of the $7 billion programme that was officially ending prematurely the same day.
The programme is expected to make the required foreign exchange available to reopen imports, help listed companies to gradually ramp up the partially closed production, and reenergise economic activities in the country.
But the two global rating agencies reminded of continued risks to the South Asian economy as the government stares at a $25 billion debt repayment hurdle in the year starting July.
“Pakistan will require significant additional financing besides the IMF disbursements to meet its debt maturities and finance an economic recovery,” Krisjanis Krustins, director of sovereigns for APAC at Fitch, told Bloomberg.
“While the IMF likely sought and received assurances for such financing, there is a risk that this could prove insufficient, particularly if current account deficits widen again.”
