ISLAMABAD: Pakistan may “dodge” default in the coming six months, however, its economic woes won’t be over as Islamabad would have to worry about a huge dollar debt repayment in April 2024, international business news publication Bloomberg reported on Monday. 

Pakistan, whose reserves have dipped to a dangerous eight-year low in recent weeks, is desperately trying to shore up its foreign exchange reserves. Talks between Islamabad and the International Monetary Fund (IMF) for a loan tranche remain suspended since September last year. 

As Pakistan faces a looming balance of payments crisis, investors and economists have voiced fears that the country may default on its payments. Finance Minister Ishaq Dar, while acknowledging the economy is in a tough spot, has repeatedly said the country will not default. 

In a report on Bloomberg Economics, the publication said the IMF’s help is enough to get Pakistan through till June. “But investors are now worried about a big dollar debt repayment due in April 2024 and are pricing those bonds at a distressed level,” the publication said. “This means Pakistan needs more external aid.”

Bloomberg said the IMF could withhold loan tranches of $2.6 billion from Pakistan. However, it added this was unlikely since the country was in “desperate need” of finances due to the impact of last year’s devastating floods. 

“The IMF money is needed to unlock $5 billion in financing expected from creditor nations and $1.7 billion in aid from the World Bank,” it said. 

Bloomberg said the amount would be enough to cover $5.9 billion in debt payments and estimated account deficits through the end of the fiscal year ending in June. However, it remained unsure how Pakistan would get through 12 months after that when its dollar financing needs would total at least $11 billion.

“This includes an estimated current account deficit of $8.8 billion and $2.2 billion in external debt repayments, among these a $1 billion dollar bond maturing in April 2024,” it said. 

The publication said external aid would help Pakistan increase its foreign exchange reserves to $14.9 billion. “This should cover dollar payments only through March 2024 — leaving the April bond repayment in question,” it added.