Is Pakistan poised for default in FY 2024?

[Communism]

I went back and read that article. The author is wearing rose tinted glasses. Her prescriptions are 'simple':

1. Taxation
2. Privatization
3. Improved Human Capital

Now, there is nothing bad about any of them, in fact they are all very good. But they are not going to solve the basic problem: Pakistan doesn't make enough of anything that the world wants to buy compared to what Pakistan wants to buy from the world. That would need huge and sustained investment in both physical and human infrastructure. If done well, it is a multiyear program, more like multi-decade. Who is willing to finance that transformation? If you take the examples of India and Bangladesh, they took nearly two decades to go from near default to financial health. And they didn't have many problems that afflict Pakistan. The author herself says it will take 10-20 years to get out of coma. The question is, who will provide the lifeline?

I'm sure the IMF and World Bank will cover it a bit in the short term if they see real progress.


Others will help out at whichever level of progress that they find to be enough to convince them.

 

[ziaulislam]

N league and Dar really fcked the country, and the establishment up.

Had they done what they promised and what Mian Mansha narrated to the buffoons with uniforms, aaj jo kuch ho raha hai na hota and the estab could have actually had something to stand on.

Their public perception would not have plummeted. As Wajaht Khan said, pehle ham aap par proud thay, aaj koi nhn hai.

Morons all around.

Nah..
I am pretty sure people will forget

 

[ghazi52]

,.,.,.

Pakistan’s time being wasted, says Dar in reference to delay in IMF funding​

• Says global institutions want Pakistan to default like Sri Lanka and then enter negotiations

June 15, 2023

Finance Minister Ishaq Dar said on Thursday that global institutions want Pakistan to default like Sri Lanka and then enter negotiations.

In an apparent reference to the delay in funding from the International Monetary Fund (IMF), he stated that “Pakistan’s time is being wasted”.

“We are a victim of geopolitics. IMF has never dealt this way in past 30 years,” he said while speaking to reporters in Islamabad. “Few institutions want Pakistan to become Sri Lanka and then begin negotiations.”

However, he added that “Pakistan will receive good news by June 30”.

He added that Pakistan met every condition of IMF including securing external financing and sharing budget 2023-24 details.

“Other conditions were completed as well,” he said. “I do not understand what IMF wants and why it is not proceeding with staff level agreement.”

 

[Jango]

Nah..
I am pretty sure people will forget

They will, but I don't think very soon.

 

[epebble]

,.,.,.

Pakistan’s time being wasted, says Dar in reference to delay in IMF funding​

• Says global institutions want Pakistan to default like Sri Lanka and then enter negotiations

June 15, 2023

Finance Minister Ishaq Dar said on Thursday that global institutions want Pakistan to default like Sri Lanka and then enter negotiations.

In an apparent reference to the delay in funding from the International Monetary Fund (IMF), he stated that “Pakistan’s time is being wasted”.

“We are a victim of geopolitics. IMF has never dealt this way in past 30 years,” he said while speaking to reporters in Islamabad. “Few institutions want Pakistan to become Sri Lanka and then begin negotiations.”

However, he added that “Pakistan will receive good news by June 30”.

He added that Pakistan met every condition of IMF including securing external financing and sharing budget 2023-24 details.

“Other conditions were completed as well,” he said. “I do not understand what IMF wants and why it is not proceeding with staff level agreement.”

He is being obtuse. IMF wants Pakistan to default because that is the only way an IMF loan can be made at higher priority to Chinese loan. This would not have happened if Chinese loan terms were public like IMF loans.

 

[ghazi52]

.,.,

 

[epebble]

.,.,

Odds are zero to 1:

Pakistan cannot cave in to all IMF demands: Ishaq Dar

ISLAMABAD: Following the International Monetary Fund's statement on the government’s failure to broaden the tax base through the proposed budget for the fiscal year 2023-24, Finance Minister...

www.thenews.com.pk

 

[313ghazi]

maybe america can save us if we pivot to them

there's obviously geopolitics behind all of this

Spend more than you earn and regularly leave your money in the care of thieves.

I fail to see the yahoodi saazish in that one bro.

 

[Genghis khan1]

Idea is to keep Pakistan on it’s toes. Keep it in perpetual state of begging using compromised military generals and via corrupt politicians. Total collapse or Default is not good as it could lead to total unrest in region, refugee’s crisis , terrorism. Nuclear weapon getting outta hands. More headaches for the western world.

Letting Pakistan prosper which can create independent policy and/ or give counter balancing support to China against US regional partner India in case of conflict is also not acceptable.

So as long as Brown sahib in Uniform is act like a good boy. Nothing is going to change.

 

[epebble]

Idea is to keep Pakistan on it’s toes. Keep it in perpetual state of begging using compromised military generals and via corrupt politicians.

But who is doing the keep? And how?

 

[ziaulislam]

They will, but I don't think very soon.

5yra at best
5yrs is bilawal
Next is maryum nawaz
24 crore people is big asset to profit on

.,.,.,

Is Pakistan poised for default in FY24?​

Khurram Husain
June 14, 2023

WITH dangerously low foreign exchange reserves and a steep debt repayment schedule looming for fiscal year 2024 that begins in July, Pakistan is facing a stark prospect of potential default or even a larger balance of payments crisis in the 12 months ahead.

Data obtained unofficially from a senior source privy to the country’s debt repayment schedule shows Pakistan faces $8.7 billion outflows on public debt payments in FY24 (including principal and interest) that are not subject to rollover.

On top of this, there is another $5bn approximately on private debt outflows as per the IMF staff report released in September 2022, bringing the total to $13.7bn in debt-related payments. Repayments on account of publicly guaranteed debt are on top of this.

The monthly schedule of outflows as per this government data is shown in the attached graphic. Assuming zero current account deficit, all rollovers going smoothly, debt payments made on time and no external financing support, the data shows State Bank’s foreign exchange reserves going negative by December of this year.

A large payment of $1.6bn is due in July, including $1bn of a Chinese SAFE deposit that is maturing and has been rolled over smoothly in all years since it was drawn. Government accounting convention requires it be listed as an outflow until a rollover date has been agreed between both parties. Should it be rolled over successfully again this year, July will still see a sizable outflow of $600 million.

June is already seeing hectic activity around debt repayments. In an analyst briefing following Monday’s monetary policy decision, the State Bank governor said $3.6bn was maturing this month, of which $400m has already been paid and another $2.3bn is likely to be rolled over.

“We have concurrence from both sides on this,” he told the attendees, though it seems a date has not yet been agreed because the amount is still being counted as an outflow. That still leaves a $900m further debt service bill in June to be covered from the reserves that are below $4bn already.

Of the total outflows on public debt account scheduled for the next fiscal year, $4.7bn is in July to December. April 2024 sees a large bond maturity when outflows leap to $1.2bn, and June 2024 sees another $1.5bn maturity of several instruments, only some of which are eligible for rollover.

If the government succeeds in the next few days in getting a rollover on the $2.3bn loan from a consortium of Chinese banks that was announced on June 22 last year, the scheduled outflow for June 2024 will rise to $3.8bn since these maturities will then fall due next June.

According to the last IMF staff report, private debt repayments on external account for FY24 are $5bn. These funds are also, under normal circumstances, rolled over fairly easily provided the borrower has been servicing the loan on time. Whether or not they’ll represent a drain on the reserves in the forthcoming year depends on the ability of these borrowers to continue servicing their loans in foreign exchange.

The same report shows Pakistan’s total public debt repayments to be just under $20bn, with another $1.68bn to be repaid to the IMF, and $13bn given as rollover on short-term debt. These numbers suggest outflows on public debt payments should be $8.7bn, consistent with unofficial government figures obtained by Dawn.

But this figure differs greatly from other numbers compiled by sovereign debt advisory firms and private creditors who hold Pakistani bonds. One such data panel, drawn up by a European firm and seen by Dawn, shows public external debt servicing for FY24 to be slightly higher than $14bn.

These creditors and firms triangulate their numbers from various sources, including databases maintained by Bloomberg, the World Bank and the IMF. When Dawn asked one of them for an explanation as to why their estimate for Pakistan’s debt service obligations for FY24 differs so widely from the one provided by the government, they offered various theories but were unable to reconcile the difference mainly because they could not agree on the assumptions that went into deciding which debt obligations will be rolled over and which ones will not.

“We never used this figure,” one individual, who has worked on estimating Pakistan’s debt service obligations, said, referring to the $8.7bn number. The person did not wish to be identified due to the sensitivity of the matter. “Because we never managed to understand what they assume will be rolled over.”

According to these individuals from the private sector, the $13bn assumed to be rolled over in FY24 seems too large. “I understand that this would include $7bn of SAFE and Saudi deposit, maybe $1bn of Islamic Development Bank facility. But I am having a hard time understanding where the other $5bn of rollovers come from,” he continued.

Complicating matters further, budget documents show repayment of foreign and short-term credits as $15.3bn in FY24. Against this figure, they show total external inflows to be $24bn, including $4.5bn in commercial borrowing, $4bn in a new SAFE deposit from China, $6bn deposits from Saudi Arabia and the United Arab Emirates and a $1.5bn international bond. How many of these inflows will actually materialise is another large question mark.

Whichever figure one takes — $8.7bn or $14bn or $15.3 — one thing is clear: there is no clear financing plan to meet these obligations for next year.

The government is projecting a current account deficit of $6bn. Coupled with the debt service payments, each of these figures yields an external financing requirement of either $14.7bn or $20bn or $21.3bn.

The plan chalked out by the government sounds optimistic in the absence of an IMF programme. And Finance Minister Ishaq Dar could have complicated the government’s efforts to secure the critical rollovers looming in June and July this year with his premature talk of a possible “debt restructuring”.

Seen from any angle, FY24 is going to see serious headwinds for the external sector, with ramifications for the exchange rate, inflation, and possibly even the integrity of the energy supply chain should the forex shortages intensify.

The country started FY23 with SBP reserves of $9.7bn. It made debt service payments of $9.7bn from July to April, and secured debt-creating inflows of $7.3bn in the same period, yielding a net drain of $2.4bn on the reserves. Coupled with a current account deficit of $3.3bn, the reserves fell by $5.7bn in this period.

No major covenants have been broken with the country’s external creditors so far. But for the next fiscal year Pakistan is looking at a higher debt service bill, very slim chance of securing further external financing support, and far lower level of reserves than last year.

The possibility of landing up in a situation where the foreign exchange reserves can no longer support even the basic life support systems of the economy is now a clear and present danger. If financing support does not arrive fast, the situation would have lingered too close to the edge for too long for a country of 220 million people.

Situationer: Is Pakistan poised for default in FY24?

Data shows State Bank’s foreign exchange reserves going negative by December of this year.

www.dawn.com

This would have been so easy to roll over if IK govt was there ..with triple downgrade...not possible anymore

 

[Muji.Iqbal]

Spend more than you earn and regularly leave your money in the care of thieves.

I fail to see the yahoodi saazish in that one bro.

Hopefully China will bail Pakistan out.

Or maybe Saudi Arabia + UAE + Qatar + Bahrain + Kuwait + Oman will bail Pakistan out.

There are many options.

 

[Dalit]

,.,.,.

Pakistan’s time being wasted, says Dar in reference to delay in IMF funding​

• Says global institutions want Pakistan to default like Sri Lanka and then enter negotiations

June 15, 2023

Finance Minister Ishaq Dar said on Thursday that global institutions want Pakistan to default like Sri Lanka and then enter negotiations.

In an apparent reference to the delay in funding from the International Monetary Fund (IMF), he stated that “Pakistan’s time is being wasted”.

“We are a victim of geopolitics. IMF has never dealt this way in past 30 years,” he said while speaking to reporters in Islamabad. “Few institutions want Pakistan to become Sri Lanka and then begin negotiations.”

However, he added that “Pakistan will receive good news by June 30”.

He added that Pakistan met every condition of IMF including securing external financing and sharing budget 2023-24 details.

“Other conditions were completed as well,” he said. “I do not understand what IMF wants and why it is not proceeding with staff level agreement.”

I thought it was a conspiracy by Imran Khan against the Pakistani state? Isn't Imran Khan dictating the IMF to boycott the Pakistani state?

Hopefully China will bail Pakistan out.

Or maybe Saudi Arabia + UAE + Qatar + Bahrain + Kuwait + Oman will bail Pakistan out.

There are many options.

Every institute and nation is tired of generals and PDM. There is zero trust in a nation that owes money, but doesn't repay on time. A nation that keeps borrowing and begging endlessly.

 

[volatile]

Two things to consider Foreign exchange held by private banks in time of need will be taken by SBP , default is a subjective term and widely used generally applicable against bonds , financial institution borrowing (Seems unlikely we will default on these considering the past trend) . Current account is surplus and continues to do so in coming months amid oil bill in check and curtailment of un necessary imports . Side effect will be shrinkage or stagnation of GDP growth may be 2-3 percent on average ,FDI will remain and interesting factor since CPEC can change the situation in few years ,based on above not likely

 

[Dr-who]

IMF program is for 6.7 Billion $

PSE cost us 1.7 billion $ per annum
Federal PSDP is 3.5 billion $ (1 trillion pkr)
Provincial PSDP ~5 Billion $ per annum
State bank pakistan commodity support price of sugar cane & wheat ~1 billion $ ??
And then corruption & public procurement to run govt institutions
Roshan digital account
Retail, agriculture & real estate tax income(if implemented)


I think pakistan has enough money to run govt, spend a substantial amount on defense, take care of welfare, spend on education, health, housing and transportation

All it needs are reform, proper justice system, & divert money to sectors which are in real need.
We are in default because of our own incompetence