n the Bloomberg report, calculations of Pakistan’s total foreign debt ($120bn) and total budget for 2015-16 ($13tr) are incorrect due to which their assertions are questionable. Despite improvement in the country’s security situation and the economy growing at an eight-year high, Pakistan risks default as 42 percent of its foreign debt, around $50 billion, is due in 2016, reports Bloomberg.
Around $30 billion is due between July and September, of which $8.3 billion will need to be in foreign currency, depleting 40pc of the nation’s $21 billion in foreign-exchange holdings. But a major part of the debt due is in local currency, which leaves the government with room to introduce more short-term instruments to leverage its current liabilities.“Pakistan’s high level of public debt, with a large portion financed through short-term instruments, does make the sovereign’s ability to meet their financing needs more sensitive to market conditions,” Mervyn Tang, lead analyst for Pakistan at Fitch Ratings Ltd., told Bloomberg.
In 2013, a $6.6 billion loan from the International Monetary Fund (IMF) was used to make payments for previous outstanding loans and avoid a Greece-like crisis. Since then, the projected debt due by end-2016 has grown by 79pc.
At Rs13 trillion ($124 billion), 77 pc of the budget is already allocated for loan repayments this year.
A concurrent challenge is meeting IMF demands to privatise state-owned concerns, as witnessed by the strike at Pakistan International Airlines, which ended only last week.
November 2015 saw new taxes worth Rs40 billion to meet the fiscal deficit.