By Staff Reporter
KARACHI: The State Bank of Pakistan (SBP) has successfully repaid a $1 billion Eurobond, it said on Saturday, amid efforts to secure a new long-term bailout from the International Monetary Fund (IMF) to stabilize its economy and manage external financing needs.
The repayment, which covered the principal and interest of the 10-year bond issued in 2014, was made on Friday as the bond reached maturity.
“SBP has successfully executed the repayment of US$ 1 billion Pakistan’s International Bond on 12 April 2024 (principal plus interest). The payment was made to the agent bank for onward distribution to the bondholders,” the central bank said in a statement.
The bond, which has seen an 84 percent rally this year, was a focal point of investor concern last year when Pakistan’s foreign exchange reserves dipped below $3 billion. The delay in the IMF programme had raised fears of a default. However, following a $3 billion IMF stand-by arrangement secured last summer and smooth general elections in February 2024, investor confidence has been restored, leading to a significant rally in the country’s bonds.
Despite the optimistic short-term financial outlook, concerns about Pakistan’s ability to manage its long-term debt persist. The country faces $4.3 billion in external debt repayments in the final quarter of the fiscal year.
“After repayment of 2024 bond, Pakistan’s total outstanding international bonds/Sukuks are $6.8 billion (6.8 percent of public external debt) with the next maturity amounting to $500 million in September 2025,” said Shahid Ali Habib, the CEO at Arif Habib Limited.
“Also Finance Minister Muhammad Aurangzeb mentioned in his recent media interaction that effort will be made to explore opportunities in the Chinese bond market.”
Following the bond repayment, the SBP’s foreign exchange reserves have decreased, but the expected release of a $1.1 billion final IMF tranche later this month could boost reserves to $8 billion. As of March 29, the SBP reported $8.04 billion in reserves.
IMF head Kristalina Georgieva confirmed ongoing discussions with Pakistan for a potential follow-up programme. Finance Minister Aurangzeb is set to attend the IMF-World Bank spring meeting in Washington from April 15–20, where he will formally request Pakistan’s 24th long-term IMF bailout.
Pakistan is reportedly seeking to augment the IMF’s extended fund facility through climate finance, which could provide an additional $6 to $8 billion for the upcoming programme.
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