Pakistan has to repay $27 billion external debt in next two years – IMF

Pakistan's external debt worth $27 billion will be maturing within next two years.

The International Monetary Fund (IMF) says that Pakistan’s external debt worth $27 billion will be maturing within the course of the next two years.

The debt repayment figures were shared in IMF’s new Regional Outlook Report Update on North Africa, Middle East, Afghanistan. When Pakistan and IMF have entered the final phase of talks regarding the bailout package, the staggering debt repayment amount will definitely influence the terms and conditions and will adversely affect the SAPs.

As of February 2019, the $27 billion maturing external debt is equal to 27% of Pakistan’s total external debts and liabilities. With that, it is also the highest repayment by any other country in the region. According to government and private sector experts, if Pakistan needs to remain financially solvent, it will require $46 billion to $50 billion in the coming two years.

”Many countries have large foreign currency debt – some $27 billion – said to mature in the next two years, leaving them more exposed to slower growth prospects and financial market volatility” – said IMF. 

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However, Pakistan’s overall debt-to-GDP ratio is expected to remain high at 77% of Gross Domestic Product by June this year – another IMF report suggested.

The countries where public debt exceeds 70% of the GDP are considered to be at a higher risk of debt distress by the IMF’s Public Debt Sustainability Analysis in Market Access Countries. Pakistan has already crossed this dangerous point at the end of the previous PMLN government when debt to GDP ratio soared to 72.5%.

IMF revealed the report on the same day when it engaged with Pakistan in talks for a possible bailout package. Back in November, both initiated discussions but failed to reach an agreement due to differences. However, this time, it is expected that they will overcome it and the package will be finalised.

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