Pakistan dependent on foreign loans
February 6, 2019 -- China, Saudi Arabia and the United Arab Emirates are providing billions of dollars in financial support to Pakistan as the country burns through its foreign currency reserves at the fastest pace in Asia. Saudi Crown Prince Mohammed bin Salman will visit Pakistan from February 14-18.
Since the election of Prime Minister Imran Khan in July, the State Bank of Pakistan has received some $13.5 billion in loans or pledges from its allies. Premier Khan has been reluctant to ask the International Monetary Fund (IMF) for help again -- in 2013 Islamabad was loaned $6.7 billion by the IMF. However, the IMF has confirmed that Pakistan has asked for an emergency bailout of $8 billion to cover sovereign debt payments.
Both Fitch Ratings and Standard & Poor’s -- two of the three major global rating agencies -- have downgraded Pakistan’s long-term debt rating to “B-Negative.” The downgrade indicates a higher credit risk; therefore, it is likely to push up interest rates required from government and corporate bodies when they go to the international markets to raise borrowing.