NEW YORK – Pakistan could default on external payments if it fails to revive the loan programme with the International Monetary Fund (IMF) stalled since last year amid economic crisis in the South Asian country.
The warning has been issued by Moody’s, a ratings agency, as the cash-strapped country is scrambling to complete the ninth review to secure $1.2 billion from the global lender.
“We consider that Pakistan will meet its external payments for the remainder of this fiscal year ending in June,” Grace Lim, a sovereign analyst with the ratings company in Singapore, was quoted as saying in a Bloomberg report.
“However, Pakistan’s financing options beyond June are highly uncertain. Without an IMF programme, Pakistan could default given its very weak reserves,” the analyst said.
The foreign exchange reserves have dropped to critical levels while talks with the IMF for the release of ninth tranche are still unsuccessful.
The foreign exchange reserves held by the State Bank of Pakistan (SBP) stood at $4.457 billion as of April 28, 2023.
Meanwhile, consumer prices witnessed an increase in the outgoing week due to surge in rates of wheat flour, chicken, potatoes, pulses and powdered milk, taking the weekly inflation to 48.35% on an annual basis.
IMF wants Pakistan to further increase interest rates to fight record inflation
