SBP expects $2bn rollover next week, $4bn by June 2024

March 19, 2024 (MLN): The $2 billion roll-over is in process and likely to be finalized in the coming week while another roll-over of $4bn is expected by June 2024, Governor of the State Bank of Pakistan (SBP) Mr Jameel Ahmed informed during the post-MPC analyst briefing session on Monday.

While notifying the house regarding the expected repayments for FY24, the Governor stated that the country’s repayments stood at $24.3bn at the start, of which $13.5bn, including $2.6bn in interest payments, has been paid or rolled over. Additionally, the aforementioned $6bn will also be rolled over.

The net payable stands at $3.5bn, which the central bank is fully prepared to meet as the obligations fall due. Meanwhile, debt repayable during FY25 is expected to be at a similar level, with a similar level of rollovers expected, i.e., $12bn.

Regarding the foreign exchange reserves situation, Mr Jameel Ahmed said that on the back of external buffers and the successful conclusion of the SBA program with the IMF, FX reserves are likely to reach the $9.1bn mark.

In response to a query on the ongoing talks with the IMF, the governor refrained from commenting on the meetings’ takeaways. However, he seemed optimistic while stating that the final assessment is anticipated to be shared by next week, with expectations of its conclusion.

Yesterday, the MPC decided to keep the policy rate unchanged at 22% for the sixth consecutive meeting.

The decision came in line with the market expectations wherein the majority of market participants were in consensus on the rate pause.

The MPC noted a few key developments since its last meeting, which have implications for the macroeconomic outlook.

• The latest data continues to depict a moderate pick-up in economic activity, led by a rebound in agriculture output.
• External current account balance is turning out better than anticipated and has helped maintain FX buffers despite weak financial inflows.
• While inflation expectations of businesses have shown a steady increase since December, those for consumers have also inched up in March.

Going forward, any further adjustments in administered prices or fiscal measures that may push prices up pose a risk to the near- and medium-term inflation outlook.

Cognizant of these risks, the committee assessed that it is prudent to continue with the current monetary policy stance at this stage.

Copyright Mettis Link News