Saturday, July 13, 2024

Pakistan’s Risk of Default Spikes, Reaches New High of 64.2%

Pakistan was on verge of getting into default earlier but they recovered somehow. Now the risk of Default is getting high due to a lack of repaying foreign debt.

On Monday, the five-year currency default swap (CDS) index for Pakistan increased by 4.2 percentage points to a new high of 64.2%.

The main reason is Nation lacks to make increasing import payments and timely payments on debt.

Pakistan is expected to pay back $1 billion in relation to a five-year Sukuk (a bond that complies with Shariah) that would last on December 5, 2022.

Investors may be concerned that the nation may not be able to repay the $1 billion Sukuk.

However, SBP Governor Jameel Ahmad clarified another day that country had enough foreign exchange reserves to pay for imports as well as foreign debt.

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