The gross domestic product (GDP) is expected to shrink to two per cent during the current fiscal year ending June compared with six per cent in the previous financial year. “The probability of default is high, but it is less than 50 per cent,” said Krisjanis Krustins, a Hong Kong-based director at Fitch. The rating agency has downgraded Pakistan’s long-term foreign-currency issuer default rating to ‘CCC-’, from ‘CCC+’, reflecting further sharp deterioration in external liquidity and funding conditions, and the decline of foreign exchange reserves to critically low levels. The country needs to repay about $3 billion of foreign debt by June, while $4 billion is expected to be rolled over,” central bank Governor Jameel Ahmad said recently.įitch Ratings said default is a real possibility in Pakistan, as indicated in the current rating. However, Pakistan has missed such timelines in the past. Prime Minister Shehbaz Sharif, Finance Minister Ishaq Dar, and Finance Secretary Hamed Yaqoob Sheikh iterated that a deal was likely in the next few days. Pakistan has implemented a series of policy measures to revive the IMF plan and receive a $1.2 billion tranche once the staff-level agreement is reached. Whether and when Pakistan can receive the next instalment from the IMF is still up in the air,” the report said. “Unless the pay-out comes through soon, a state of moratorium looks unavoidable.
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