SBP governor assures debt obligations not a major hurdle for FY25

August 08, 2024 (MLN): State Bank of Pakistan (SBP) governor Jameel Ahmad assured on Wednesday that more than $16 billion of outstanding debt for the fiscal year 2025 would be rolled over by friendly countries, providing a much-needed breathing space to the government.

He noted that the total outstanding debt payment for FY25 stood at $26.2bn, which after the rollovers, leaves a balance of $10bn to be paid by June next year.

Jameel Ahmad testified before the National Assembly Standing Committee on Finance and Revenue, chaired by MNA Naveed Qamar, yesterday.

He added that the central bank had already paid $1.5bn in debt last month, leaving a remaining debt obligation of $8.5bn for the remainder of the fiscal year.

Moreover, Secretary of Finance Imdad Ullah Bosal informed the committee that Pakistan would receive its first International Monetary Fund (IMF) tranche following the rollover of around $4bn in Chinese commercial loans.

He added that $4.4bn will also be received from the Asian Development Bank and the World Bank.

The SBP governor said there is no pressure on external payments, so the rupee is expected to remain stable.

Jameel Ahmad added that foreign exchange reserves could reach $13bn by the end of the fiscal year.

With stability in economic conditions, further easing in the policy rate is forecasted, he said.

However, he cautioned that inflation could rise to 13.5% this fiscal year due to budgetary measures and energy prices.

The SBP governor outlined a five-year plan with the National Assembly's Finance Committee, which includes restoring price stability, controlling the current account deficit, ensuring that foreign exchange reserves cover three months’ worth of imports, and achieving financial stability and transparency.

He stated that GDP growth has been limited to 3.5% over the past decade. He emphasized the need to increase exports by 10 to 15% and assured that there are no restrictions on imports.

Copyright Mettis Link News