By Mahua Venkatesh
New Delhi, Dec 12: As Pakistan's foreign exchange reserves held by its central bank fell to $6.7 billion during the week that ended December 2, Islamabad may have to look at restructuring its debt. According to reports, Islamabad may turn to its bilateral creditors including China, which accounts for 30 per cent of its total external debt pie for restructuring of debt.
An analyst, however, told India Narrative that China with its own financial challenges and rising debt levels may not be able to open its coffers. "The problem for China is its own domestic financial problems and the rising debt levels owing to the BRI (Belt and Road Initiative) projects, prompting many countries such as Sri Lanka to seek assistance from Beijing. It has to be seen how much China will be willing," he said.
The forex reserves - lowest in about four years - are currently sufficient to handle imports for a month. Though the fall in reserves could have been due to the $1 billion debt payment, the country will find it tough to manage a debt repayment of over $30 billion this fiscal year and $73 billion in the next three-years.
The delay in the International Monetary Fund holding its review meeting on its current loan programme with Islamabad has further created worries for the country's economic managers. Talks between Islamabad and IMF were slated to be held in October but it is yet to take place. "Billions of dollars of debt payments are due in the next few months from Pakistan, which is facing a delay in the release of the next tranche of its $6.6 billion bailout from the IMF, as the lender demands a better economic plan from Islamabad," the Wall Street Journal said.
Pakistan's Finance Minister Ishaq Dar is putting up a brave face.
"Pakistan will not default just because of the propaganda of the opposition (Pakistan Tehreek-i-Insaf). The country's direction is right and it is not heading for default," Dar said at an interaction with businessmen.
The political uncertainty with general elections inching closer and Imran Khan led opposition attacking the government from time to time have made things worse.
Pakistan's external debts, which were at $65 billion in 2015, have now touched $130 billion.