Pakistan

Pakistan successfully repays foreign debt worth $1 billion

SBP says repayment including interest done days before bond's maturity date

Salman Siddiqui April 13, 2024

The report proposed holding the government accountable for violating the Fiscal Responsibility and Debt Limitation Act and introducing legislation to prevent currency manipulation. photo: REUTERS

KARACHI:

Pakistan has successfully repaid a foreign debt worth $1 billion, days before the 10-year Eurobond was to mature, increasing the confidence of global investors in regard to the domestic economy.

"SBP (State Bank of Pakistan) has successfully executed the repayment of $1 billion Pakistan’s International Bond on April 12, 2024 (principal plus interest)," the central bank reported on Saturday.

"The payment was made to the agent bank for onward distribution to the bondholders," the central bank added.

This repayment occurred on Friday, three days ahead of the scheduled maturity date of the 10-year Eurobond, which was to fall on April 15.

Following this payment, Pakistan's outstanding foreign debt from international bonds has decreased to $6.8 billion, spread across seven bonds maturing between September 2025 and April 2051.

Read SBP facilitated govt debt: report

The recently repaid bond experienced a remarkable surge in value last week, reaching a record-high price of $1 per unit, marking a significant increase from its value of less than half in June 2023.

The surge reflected strong investor confidence in Pakistan's economy.

Moreover, Pakistan's other global bonds also saw a substantial rally after the nation reached a staff-level agreement with the IMF to secure the final tranche of $1.1 billion. This rally was further fueled by Pakistan's intent to pursue a longer and larger package with the IMF in June, following the completion of the current $3 billion program in April.

The anticipated IMF tranche of $1.1 billion, likely to be received by the end of April, is expected to restore the reserves to over the $8 billion mark.

Following the repayment of the $1 billion debt in April, the country's foreign exchange reserves will experience a decline.

Pakistan had repaid the last Eurobond of $1 billion days before its maturing date in December despite facing a foreign exchange reserves crisis at that time.