Pakistan Default: Big crisis for poor Pakistan, risk of default due to increase in bond yield

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Pakistan Default: Big crisis for poor Pakistan, risk of default due to increase in bond yield

Pakistan Default Fear: In the international market, Pakistan’s US dollar bond yield has climbed 73 basis points to reach 106.37 percent. According to the report of The Express Tribune, this boom may further increase the risk of default for repaying foreign debt for Pakistan.

Whether it will be successful in fulfilling the obligation given by IMF – not known

The rise in bond yields reflects Pakistan’s volatility in the global bond market. It is still not certain whether Islamabad will be able to revive the International Monetary Fund’s (IMF) $6.7 billion loan program and meet international payment obligations after June 2023, The Express Tribune reported.

Pakistan’s international bond yield will mature next year

The yield on the 10-year Pakistan Government International Bond worth $1 billion, maturing on April 15, 2024, has shown a cumulative rise of 30.60 percentage points in the past five months. Similarly, yields on six other Pakistani global bonds maturing at different times till April 2051 also saw a rise in the range of 10 to 39 basis points. A bond maturing in January 2029 saw a recovery of 6 basis points.

Pakistan may default after June 2023 without IMF loan programme- IMF

Before the outbreak of Kovid-19 in Pakistan in February 2020, the bond yield was around 8-10 per cent. Pakistan’s Finance Minister Ishaq Dar assured last week that the country has made arrangements to repay foreign debt of $3.7 billion by the end of June 2023, but this did not reduce the concern. The Express Tribune reported that Moody’s Investors Service warned that Pakistan could default after June 2023 without the IMF loan programme. The level of Pakistan’s US dollar bond yield has increased wildly and due to this the IMF has also expressed apprehension that this country may default.

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