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Bond Market News
Pakistan Planning $6bn IMF Loan; Coalition Government Formed
February 23, 2024
Pakistan is said to plan seeking at least $6bn in new loan from the IMF to help repay its debts this year, as per sources. The country has $25bn in external debt payments for the fiscal year beginning July, an amount that is about 2x its forex reserves. The IMF’s loans under its Extended Fund Facility (EFF) are generally approved for 3-4 years to support countries to fix structural issues and are repaid after 4.5-12 years.
Separately, in a latest update regarding the elections, the PPP and PML-N parties are set to form a coalition government and break a two-week impasse following the February 8 election. The two parties would keep former Prime Minister Imran Khan’s party (PTI) out of power despite it having won the most seats. While the PTI won the most seats, it did not get an outright majority. The deadline to hold a parliament session for forming the new government is February 29.
Pakistan’s dollar bonds were trading slightly weaker with its 6.875% 2027s down 0.7 points to 73.4, yielding 16.7%.
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