ISLAMABAD: International Monetary Fund (IMF) has claimed that crisis-hit and cash-strapped Pakistan faces debt-repayment challenges.

Development came hours after an IMF support team reached Pakistan to hold talks regarding South Asian nation's request for fresh bailout package under the Extended Fund Facility (EFF).

In its staff report on country issued earlier this month, Washington-based lender said: "Pakistan's capacity to repay fund is subject to significant risks and remains critically dependent on policy implementation and timely external financing."

"Exceptionally high risks notably from delayed adoption of reforms, high public debt and gross financing needs, low gross reserves and SBP's net FX derivative position, decline in inflows and sociopolitical factors-could jeopardise policy implementation and erode repayment capacity and debt sustainability," read report.

It further said that restoring external viability was critical to ensure Pakistan's capacity to repay fund, and hinges on strong policy implementation, including, but not limited to, external asset accumulation and exchange rate flexibility.

Geopolitical instability is an additional source of risk, even as uncertainty surrounding global financial conditions has declined somewhat since last review, it added.

Global lender noted that country needed gross financing worth $ 123 billion during next five years, adding that Pakistan was expected to seek $ 21 billion in fiscal year 2024-25 and $ 23 billion in 2025-26.

Report further said that crisis-hit country is expected to seek $ 22 billion in 2026-27, $ 29 billion in 2027-28 and $ 28 billion in 2028-29.

Published in The Daily National Courier, May, 11 2024

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