trending Market Intelligence /marketintelligence/en/news-insights/trending/y1jahco9b39_qma0lqvbfw2 content esgSubNav
In This List

Imminent bailout by IMF looms for Pakistan as foreign debt soars

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


Imminent bailout by IMF looms for Pakistan as foreign debt soars

Pakistan may once again need to go to the International Monetary Fund for financial support to pay its surging foreign debt and prop up its low foreign exchange reserves, Bloomberg News reported May 31.

South Asia's second-largest economy has seen its external debt and liabilities increase 76% to 10.6 trillion rupees since June 2013, up to 31% of GDP, the highest in almost six years, said the report. Pakistan's debt will continue to grow as it has the highest financing need as a percentage of GDP in emerging markets over the next two years, the IMF said.

Pakistan has received 12 bailouts from IMF since the late 1980s and just completed its last loan program in 2016, Bloomberg said. Its foreign exchange reserves dropped to the lowest in more than three years, and the currency has been devalued twice in recent months. To help repay debts, another IMF loan is likely, Yousuf Nazar, a former Citigroup Inc. banker, said in the Bloomberg report.

But the ruling Pakistan Muslim League-Nawaz party has denied that it will need to go to the IMF for help. Finance ministry officials didn't answer calls seeking comment.

The government instead said it will borrow more. It plans to raise 1.1 trillion rupees in foreign debt in the coming fiscal year starting from July 1. Major lending sources will be commercial banks, global bonds and China, according to finance ministry data.

As of May 30, US$1 was equivalent to 115.60 Pakistani rupee.