Pakistan to repay $22bn foreign debt in 12 months

Amid efforts to dodge the imminent risk of default, Pakistan is due to repay foreign debt and interest worth almost $22 billion over the next 12 months.

The dollar-strapped government, upon successful resumption of the International Monetary Fund (IMF) programme, is expected to initiate talks with creditors to restructure its foreign debt. The country’s debt obligations currently stand significantly higher than the inflows it expects to receive in the coming years.

Data from the State Bank of Pakistan (SBP) suggests that Pakistan is to repay a total debt of $21.95 billion in one year; $19.34 billion in principal and another $2.60 billion in interest on the total debt.

According to data shared by the Pak-Kuwait Investment Company (PKIC), however, the central bank has projected no foreign debt inflows for the next 12 months.

The breakdown of data suggests the country is to pay off $3.95 billion within one month. In the next three months, it is due to return $4.63 billion and is to repay another $13.37 billion in the last eight months of the period under review.

Pakistan is to return around $80 billion in foreign debt over the next three-and-half years (from February 2023 until June 2026).

On the contrary, however, the country’s foreign exchange reserves have depleted to an alarming level of less than a three-week import cover at $3.1 billion at present.