Bloomberg reported that the State Bank of Pakistan (SBP) made the payment for a $1 billion bond on Friday, as claimed by central bank chief Jameel Ahmad.
Abid Qamar, a spokesman for the SBP, informed the magazine that Pakistan transferred the payment on the Sukuk bonds to Citigroup Inc, which will distribute the monies to the bondholders.
According to indicative pricing data from Bloomberg, the notes’ price rose to 98.9 cents on Friday, marking a roughly 16-cent rebound from October’s record low of 83 cents.
The early payment helped avoid a near-term default, but questions remain over the company’s capacity to pay its long-term debt.
Pakistan must return around $25 billion in the fiscal year 2022-23. However, the majority of this debt has been refinanced or repaid, Ahmad added.
Earlier, at the post-monetary policy briefing, the SBP head stated that multilateral and bilateral sources of finance had been secured to ensure that the repayment would not impact foreign exchange reserves.
Notably, Pakistan also got $500 million from the Asian Infrastructure Investment Bank earlier this week, while Saudi Arabia rolled over its $3 billion deposit with the SBP today.
Former Ministry of Finance adviser Dr. Khaqan Hassan Najeeb remarked that it is reassuring to note that Pakistan has paid the $1 billion Sukuk payment ahead of schedule.
“This eliminates the imminent possibility of default,” he added.
However, the economist added that policymakers should keep in mind that Pakistan continues to face a dollar liquidity crunch and that to overcome this, Pakistan must remain a member of the IMF in addition to receiving promised inflows from friendly nations and multilateral and bilateral partners.
Some courageous measures, such as energy conservation, the reappropriation of the Public Sector Development Programme (PSDP), spending management, fiscal austerity to support monetary policy, and the acceleration of projects to attract dollar inflows, are also required.