International rating agency Moody’s has predicted that Pakistan can default without the International Monetary Fund (IMF) program because financial opportunities after June are highly uncertain.
Moody’s, an institution that ranks economies, has stated in its report that Pakistan can default without the International Monetary Fund (IMF) program as the financial opportunities after June are highly uncertain.
According to Grace Lim, a Moody’s analyst in Singapore, “We believe that Pakistan will fulfill its external obligations in the current fiscal year, but after June, Pakistan’s financial options are highly uncertain. Due to its very weak reserves, Pakistan can default without the IMF program.”
According to Moody’s investors, Pakistan is pushing hard to restart the $6.5 billion bailout program from the IMF’s bailout program. The program has stalled after the government failed to meet some of the loan’s conditions.
The report also stated that political instability before the upcoming elections in Pakistan is increasing the risk of delays in repayments to the IMF. This is because former Prime Minister Imran Khan’s government is not showing signs of backing down against the government and the Pakistani army.
Moody’s analyst Grace Lim said in response to an email that Pakistan’s foreign exchange reserves, which are worth $4.5 billion, are extremely low and are sufficient to cover only one month of revenues. However, after June, there is still much uncertainty surrounding negotiations with the IMF, and many other contentious issues remain unresolved.
According to S&P Global Ratings, Pakistan’s total external financing needs as a ratio of current account receivables to usable reserves is estimated to increase to 139.5 percent in FY2024 from 133 percent in 2023.
