Governor State Bank of Pakistan (SBP) Jameel Ahmed has assured that Pakistan will repay all its debts “on time” and foreign exchange reserves are expected to increase during the second half of the fiscal year.
In the latest episode of State Bank’s podcast series, Governor State Bank clarified that only $4.7 billion of debt is repayable over the next seven months to address fears of the country defaulting on its international financial obligations.
“According to the plan drawn up at the beginning of the year, there was $23 billion in outstanding debt and a current account deficit of about $10 billion, which adds up to about $33 billion,” he explained.
“Of the original amount of $23 billion, the government of Pakistan has already repaid more than $6 billion and about $4 billion has been returned through bilateral agreements with other governments, so you can say That 10 billion of the total amount has already been settled. Foreign debt,” Ahmed continued.
“Out of the remaining $13 billion, $8.3 billion is either government debt or government-related commercial debt and so we expect that amount to be rolled over,” he said. – Government foundation
“So, we’re left with about $4.7 billion in loans that we need to repay,” he said, adding that $1.1 billion of those were commercial loans while $3.2 billion were multilateral and other loans he expected to repay. It will be paid on time.
The governor also emphasized that in the last five months, there has been an inflow of about $4 billion in addition to the above-mentioned rollover of $4 billion, “whereas when the year began we expected an inflow of between 38 and 34 billion.” So, a lot of money is yet to be received.”
“Let me put it this way,” he continued, “the revenue expected in the first half of the year has been pushed into the second half of the year while our debt is being paid down as our maturities come up. This means that our reserves will start to improve.
Dismissing the “negative impression given by many analysts”, the central bank official also said that the SBI’s foreign exchange reserves after securing $500 million from the Asian Infrastructure Investment Bank (AIIB) stood at 7.9 reached a billion dollars.
However, on December 2, foreign currency reserves held by the SBP recorded a decline of $784 million to $6,714.9 million as against $7,498.7 million on November 25.
According to the central bank, the decline in reserves was due to the payment of $1 billion towards Pakistan International Sukuk and some other external debt repayments.
Ahmed, however, maintained that there was no need to panic, adding that “the government is in talks with a friendly country for $3 billion, while also in talks with multilateral agencies for more funding. Progress is being made.”
He also revealed that Pakistan has repaid loans of $1.2 billion to commercial banks and therefore “these banks are expected to re-lend the same amount”.
The governor also said that at the beginning of the fiscal year, the State Bank had estimated the current account deficit for the fiscal year to be around $10 billion and while he admitted that the current account deficit would increase by $2 to $3 billion. Expected. flood”, he remained confident that it would remain below $10 billion in fiscal 2023.
During the interview, the central bank governor noted the global challenges facing the economy but expressed confidence in the government’s measures to overcome them.
Ahmed defended the government’s decision to limit imports, as he said less than 10 percent of the country’s total imports were under administrative control. He also insisted that the move was temporary and would be “gradually phased out”, adding that the government had already provided several concessions to various sectors.
He also rejected the rumors that the government is imposing restrictions on the import of petroleum, which is increasing the prices. “Petroleum and pharmaceuticals are among the State Bank’s priority sectors,” he explained, adding, “There is absolutely no restriction on the import of petroleum products or raw materials related to the pharmaceutical sector.”
