According to a report by Bloomberg, Fitch Ratings disclosed that Pakistan has to make debt payments totaling $3.7 billion during May and June. This comes at a time when the Pakistani government is trying to obtain a bailout package from the International Monetary Fund (IMF).
Krisjanis Krustins, a director at Fitch Ratings, stated that Pakistan is due to make $700 million in debt payments in May and another $3 billion in June. Fitch Ratings also reported that they anticipate China will extend $2. billion in loans and deposits to Pakistan to be rolled over.
Pakistan has been in talks with the IMF for almost six months to restart a $6. billion bailout. However, Pakistan is currently facing default risk as its foreign exchange reserves cover imports for just one month. To prevent this, Pakistan secured financing support from China and Middle Eastern countries, crucial for the IMF.
Fitch Ratings believes Pakistan and the IMF will likely agree on the program review. However, default or debt restructuring risk has increased, reflected in Fitch downgrading Pakistan’s rating in February.