ISLAMABAD: According to Moody’s, Pakistan is likely to use foreign reserves to service debt as risks of default persist.
A Moody’s report this week said Argentina, Pakistan and Tunisia are among the countries that will have to pay off serious international debt over the next two years while having low foreign exchange reserves.
With foreign development agencies not investing in new projects, it is likely that these countries will use their foreign exchange reserves to pay off debt, further increasing their risk of default.
The agency further said that due to increasing interest payments on loans, the government will not have room to improve the economy further.
It should be noted that the size of Pakistan’s foreign exchange reserves was 9 billion 11 million dollars by the end of May 31. However, the problem is that Pakistan has to pay foreign debts equal to 10 billion dollars by the end of June 2024. It is said that the government will be able to pay the major part of the debt of 10 billion dollars and the rest will be paid from the foreign exchange reserves or more new debt can be taken for it.
Moody’s also says that due to high interest rates in the global market, Islamabad will not be able to raise new debt to repay these debts and Pakistan also does not appear to be cutting its interest rates to offer foreign investors with better returns. To attract investment.
