ISLAMABAD: State Bank of Pakistan (SBP) Governor Jameel Ahmad Friday assured that country will repay a $1 billion international bond on December 2 — three days before its due date.
In a post-monetary policy briefing, Ahmad said that the bond repayment, which matures on December 5, totals $1.08 billion.
The SBP chief told the analysts and market players present there that funding has been lined up from multilateral and bilateral sources to ensure the repayment would not affect foreign exchange reserves.
An immediate inflow of $500 million was expected next week on Tuesday from the Asian Infrastructure Investment Bank, he said.
Shedding light on the forex reserves position, he said: “Reserve levels will depend on the continued realisation of expected inflows and rollover of loans from friendly countries.”
However, Ahmad added that he was confident the reserve figure will be "much higher" by the end of the financial year in June 2023.
The governor told the briefing he expects external financing requirements would be met on time because of inflows from international lenders. He pointed out that, despite payments of $1.8 billion in November, reserves remained stable.
Apprising the analysts about the International Monetary Fund (IMF) programme, the governor said that talks between the Ministry of Finance and the Fund are in progress.
Commenting on the backlog of imports, the governor said that 27,000 pending cases have been cleared so far amounting to $2.8 billion.
Ahmad, while referring to an unexpected rise of 100 basis points in the key policy rate to 16%, said: "MPC felt it was prudent to increase the policy rate from the previous level of 15% to 16% as inflationary pressures have proven to be stronger than expected."
Meanwhile, Federal Minister for Finance and Revenue Ishaq Dar rejected reports that Pakistan was facing default risk.
Citing Bloomberg, Dar said that it only stood at 10% “as opposed to the claims of 93%”.
The perception of Pakistan’s risk of default worsened with the five-year credit default swap (CDS) surging by 30 percentage points in a week to 93% on Monday ahead of the repayment of $1 billion for a maturing international bond early next month.
However, the finance minister on Friday shared a purported infographic from Bloomberg about the estimated default probability in emerging markets.
“Bloomberg pitches Pakistan’s one-year probability of default at a low of 10% as opposed to a highly dubious number of 93% circulated by an unscrupulous local political leader a few days ago,” he said while referring to the claims of PTI Chairman Imran Khan.
“Pakistan will InshaAllah continue to honour its all financial commitments on time!," he wrote.
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