No room to move

5 May 2020 By Una Galani Follow @ugalani

Debt payments suck up the largest chunk of its budget. Islamabad’s $8 bln crisis support package is measly, yet will push the fiscal deficit to 10% of GDP. Pakistan needs more than repayment deferral from creditors, especially China. And it’s better positioned to ask than most.

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Pakistan hopes to defer repayments due to bilateral lenders this year of about $1.8 billion, the Financial Times reported on April 23 citing the finance ministry.

The government deficit could rise to as much of 10% of GDP by June 2020, from 8.9% a year earlier, according to a Moody’s estimate published on April 22.

Prime Minister Imran Khan earlier in the month pleaded for debt relief, noting the “huge discrepancy in resources” between developed and developing world economies to tackle the coronavirus.

“We do not have the money to spend on the overstretched health services and secondily to stop people of dying of hunger,” he said in a video message.

The International Monetary Fund on April 16 approved a $1.4 billion emergency loan to the South Asian nation to help it meet urgent balance of payments needs stemming from the Covid-19 outbreak.

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