Pakistan getting $4 billion as bonds take battering after floods

In this picture taken on April 15, 2019, a Pakistani dealer counts US dollars at a currency exchange shop in Karachi. (AFP)

• $4 billion additional funds expected, officials tell briefing
• “No question” of defaulting on debt, central bank chief tells analysts

KARACHI: Additional financial international commitments to Pakistan in the wake of devastating floods will offset any current account deterioration and delays in the issuing of $2 billion in bonds, central bank officials told a briefing on Monday.
Concerns have risen in recent weeks about Pakistan’s ability to raise finances to meet external financing requirements to deal with the floods that have killed 1,700 people and inflicted $30 billion in damage to the economy.
Pakistan’s ability to tap the international market has been affected by its bonds taking a battering in the secondary market and a ratings downgrade by Moody’s last week, while Fitch and S&P Global have downgraded the country’s outlook.
The deputy governor of the State Bank of Pakistan, Murtaza Syed, said Pakistan had secured an additional $4 billion in funds from multilateral lenders, attendees of a post-monetary policy briefing for analysts told Reuters.
Pakistan kept its key policy rate unchanged at 15 percent on Monday.
Pakistan’s external financing requirements for the current financial year were estimated at around $31 billion, and it had shown a funding cushion of about $6 billion to shore up fast depleting reserves, which currently stand at $7.8 billion.
The Asian Development Bank is expected to disburse $1.5 billion, the Asian Infrastructure Investment Bank $500 million, World Bank $1 billion, and about $1 billion from the United Nations in flood aid, Syed said.
These funds should “more than make up” any effect on the current account and also any delay in plans to raise $2 billion from bonds this financial year to meet financing requirements.
Governor Jameel Ahmad told participants there was “no question” about Pakistan not meeting debt repayment obligations, and financing requirements continued to be fully met.
He said Pakistan had already made $4.6 billion in debt payments this fiscal year and would make the $1 billion bond repayment in full in early December.
He added that the country’s reserves will now start to strengthen as the focus on liquidity has been drastically reduced. The bank seeks to increase reserves to $16 billion by the end of this financial year.
Ahmad said all targets set along with the IMF had been met by the central bank until the end of September.
On recent strengthening of rupee against the dollar, the deputy governor said there had been no intervention by the central bank, and it was driven by sentiment and economic fundamentals.