Pakistan's financial situation may worsen, the country has 10 times more debt than its current reserves

Pakistan's Deputy Finance Minister Ali Pervez Malik on Thursday revealed that Pakistan will have to repay $100 billion to foreign creditors over the next four years. The foreign debt currently owed by Pakistan's federal government is nearly 10 times the country's current gross foreign exchange reserves of $9.4 billion, reports the Express Tribune.

According to the report, Pakistan is planning to attempt the upcoming repayments by extending and restructuring its external debts due to its deteriorating financial situation. Another revelation made by Pakistani Finance Minister Muhammad Aurangzeb states that despite signing a new International Monetary Fund program worth USD 7 billion, the country will not be able to meet its external financing requirements.

Aurangzeb told Pakistan's Standing Committee on Finance that the IMF has found a financing gap of US$5 billion between 2024 and 2026, the Express Tribune reported.

The same report also claims that Ali Pervez Malik also tried to dodge the question of whether the government is considering debt restructuring. Additionally, the same news report claims that the USD 100 billion external debt due from spring 2024 to 2027 does not include any payments for liabilities on the Pakistan Central Bank's balance sheet and financing of the country's current account deficit.

It is noteworthy that the current scenario and the statement of Ali Pervez Malik show that the Pakistan government has no plans to repay these loans. At present, the only way out for Pakistan is to request its international lenders to restructure its loans for another year.

The Express Tribune report also claimed that Director General Debt Mohsin Chandna also told the Standing Finance Committee that Pakistan's foreign debt due for fiscal year 2024-25 has risen to USD 18.8 billion, excluding loan repayments, which are the responsibility of the central bank.

Minister of State for Finance while responding to a question posed by MNA Nafisa Shah said, “The payment of USD 18.8 billion will be made in the same manner as it was done in the past, i.e. rollover.” DG Debt also claimed that the cash deposit was USD 12.7 billion, as Kuwait had also given a loan of USD 700 million in the past.

Chandna said, according to the same news report, Pakistan will seek a total of US$100 billion in loans, including US$5 billion from Saudi Arabia, US$4 billion from China, US$3 billion from the United Arab Emirates, and US$700 million from Kuwait.