Moody’s: Pakistan’s Default Risk Increases Without IMF Support

Pakistan could potentially default without an IMF bailout, Moody’s Investor Service has warned. Grace Lim, a sovereign analyst at Moody’s in Singapore, said that Pakistan would be able to meet its external payments for the remainder of this fiscal year ending in June, but beyond that point, the country’s financing options are “highly uncertain.

” Moody’s warns that without an IMF programme, Pakistan could default due to its very weak
reserves. The nation of over 220 million people is struggling to revive a $6.5 billion bailout programme from the IMF, which has stalled after the government failed to meet some loan conditions. Political tensions ahead of elections due this year are adding to the risk of a delay in the loan.

An IMF programme beyond June would support additional financing from other multilateral and bilateral partners, which could reduce default risk. Pakistan’s foreign-exchange reserves remain extremely low, at $4.5 billion, sufficient to cover only about one month of imports.