KARACHI: Pakistan needs to repay another $3.7 billion in external debt by the end of June 30 this year, Bloomberg reported on Friday.

During the entire current fiscal year, the country has been struggling to avoid default with the help of friendly countries and multilateral lending agencies but the next fiscal year is about to begin with another huge requirement of dollars.

In an interview with Bloomberg, a Fitch Rating official said Pakistan would have to repay $3.7bn up to June 2023. The Fitch official expects China would roll over a $2.4bn loan maturing next month.

According to the report, Pakistan has to pay $700m in May and $3bn in June. Despite support from Saudi Arabia and UAE, the IMF remained unsatisfied. Staff-level agreement for $1.1.bn could not be concluded.

The prime minister as well as the finance minister has been announcing that Pakistan has fulfilled all the pre-conditions to conclude the 9th review but the IMF is unmoved.

Former finance minister Miftah Ismail recently told a private TV channel that the IMF should release the tranche since all the conditions have been met. Delaying the release of the tranche would have a bad impact on the economy.

However, the Fitch Ratings expects Pakistan and IMF to reach an agreement. Pakistan already received financial commitments from Saudi Arabia and UAE, it said.

Independent economists and analysts believe that both the default and restructuring of external debts would be greatly harmful to the economy. With the support of China Pakistan has been striving to avoid both situations.

China’s foreign minister on Friday arrived in Islamabad on a two-day visit to discuss crucial matters including funding and loan rollovers.

Recently a high official from Pakistan visited China apparently to get support for the economy while the Chinese foreign minister is expected to announce some good news for the battered economy of Pakistan.

Beijing is the biggest trade partner of Islamabad but the balance of trade is grossly in favour of China. Pakistan has great scope to expand its exports to the second-largest economy in the world.

However, some experts maintain that Chinese power companies are not happy with the payment delays. The increasing power debt is a serious issue for China. Pakistan is also not allowing outflows of profits and dividends due to extremely poor foreign exchange reserves.

Published in Dawn, May 6th, 2023