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KARACHI: Governor State Bank of Pakistan (SBP) Jameel Ahmad has said that Pakistan is out of default after making significant payments on its external debt totaling $15 billion in the first half of FY23. The remaining $3 billion in external debt must be paid in the remaining months of this fiscal year, but Ahmad is confident that this will be done successfully.
Addressing a press conference after the Monetary Policy Committee (MPC) on Monday at SBP head office, Governor SBP informed that cumulative financing requirements for this fiscal year were $33 billion including $10 billions of current account deficit and $ 23 billions of external debt. The country has successfully settled principal repayments of $15 billion so far during the current fiscal year. Out of this amount $9 billion were paid and $6 billion were rollover, he informed.
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The final $8 billion of this fiscal year must be paid in the following five months. A total of $2.2 billion will be paid out of this sum and returned to Pakistan, leaving $ 3 billion available for rollover. As a result, Pakistan must pay $3 billion in external debt by the end of June 2023, and he assured that this sum will also be properly managed.
Additionally, he stated that pledged foreign inflows are also anticipated to arrive in the upcoming months and will act as a cushion for debt payments throughout this fiscal year.
“In order to increase the foreign inflows and overcome the ongoing crisis, we need to enhance exports, home remittances and FDI besides curtailing the import to improve balance of payment” Governor SBP suggested.
He said that the current account deficit has narrowed by around 60 percent to $3.7 billion in the first half of FY23. This substantial reduction was due to a sharp contraction in imports, reflecting the impact of policy tightening and administrative measures. Now, due to import compression and better than expected current account deficit numbers of the first half of this fiscal year, the current account is likely to be below $9 billion, lower than initially estimated $10 billion.
