In a cautionary message to Pakistan, Bloomberg, the prominent US financial news service, has raised concerns about the possibility of an economic default if the country fails to seize the opportunity presented by an International Monetary Fund (IMF) deal.
Bloomberg’s Warning: Pakistan Default without IMF Deal
Based on an insightful report by Bloomberg Intelligence, Pakistan’s economic crisis may potentially worsen if the country fails to take advantage of the available International Monetary Fund (IMF) program, possibly leading to an economic default.
According to the report, Pakistan’s economy is currently facing a critical situation, urgently requiring an IMF program. The country is confronted with the imminent task of repaying $900 million by the end of June, followed by an additional $4 billion from July to December.
Furthermore, the report highlights that if the foreign exchange reserves plummet below the $4 billion mark, the risk of default will escalate even further.
Additionally, the report mentions that Pakistan has the potential to engage in discussions with the IMF for a fresh deal in October. However, to prevent a default, the country relies on continuous assistance from its friendly nations.
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In a recent report released by Bloomberg Economics, it was indicated that Pakistan is expected to avoid default in the upcoming six months. However, it’s important to note that the challenges faced by the country are far from over.
“The current economic circumstances necessitate the support of the International Monetary Fund (IMF),” stated the report, emphasizing that the assistance from the IMF will provide crucial aid to the country until the end of June.
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As per the report, investors are currently expressing concern over a substantial dollar debt repayment scheduled for April 2024, resulting in the pricing of these bonds at a distressed level. “In light of this situation, Pakistan requires additional external assistance,” the report emphasized.
Furthermore, the report highlighted that Pakistan, having incurred losses exceeding $33 billion due to the devastating floods, requires a loan from the IMF to facilitate the recovery process and address the damages. It emphasized that the IMF would provide loans based on the specific needs of the country.