Pakistan makes $1 billion foreign debt repayment including interest

Moody’s rating agency upgraded Islamabad’s credit rating outlook from ‘negative’ to ‘stable’.

In a positive step forward, Pakistan makes foreign debt repayment of over $1 billion. Moody’s rating agency recently upgraded Islamabad’s credit rating outlook from ‘negative’ to ‘stable’.

“We paid over $1 Billion including interest payment at the maturity of a Sukuk today (Monday)” – SBP official confirmed while talking to a news outlet.

Pakistan raised $1 billion by floating a Sukuk in the international market during the tenure of Mr. Nawaz Sharif in November 2014.

“Yes, the reserves may have decreased over $1 billion at this time; however, one cannot say the reserves have exactly shrunk by that amount as other transactions have to be accounted for before figuring out the actual volume of the reserves,” – the official stated.

In a weekly update reported by the central bank, the foreign currency reserves increased by $240 million to $8 billion due to official inflows during the week ended November 22. “Pakistan’s foreign exchange reserve adequacy remains low” – Moody’s investor said.

Foreign exchange reserves have fluctuated by around $7-8 billion:

The rating agency said that the foreign exchange reserves have fluctuated by $7-8 billion over the past few months, sufficient to cover just 2-2.5 months of goods import. The change in the outlook is driven by Moody’s expectation that the balance of payment dynamics will continue to improve supported by policy adjustments and currency flexibility.

Before the Sukuk payment, the government had planned to raise $1-2 Billion in fresh foreign debt. As per the initial plans of PTI after coming into government, all such bonds were to be issued immediately. In the current fiscal year, the interest of $399.5 million will be paid on outstanding amounts of Sukuks and Eurobonds.

In addition, the $2.3 Billion commercial loans, comprising $1.7 Billion of China development Bank, $300 million of Bank of China, $100 million of Standard Chartered Bank and $200 million of Credit Suisse, would mature this year. However, according to the IMF loan program of $6 billion Pakistan will receive a second tranche worth $450 million.

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