EMHC - Pakistan: 6 Questions For Emerging Markets Debt Investors

2024-03-20 12:56:00 ET

Summary

• Pakistan has a cash flow problem. Local currency debt is more of an issue than external debt given its higher debt stock and exposure held by local commercial banks.
• If local currency debt were to default, local commercial banks could also default, as they effectively finance the central government by buying local debt.
• Sovereign debt investors should closely monitor Pakistan’s commitment to achieving a primary surplus amid its high interest-to-revenue ratio.
• The role of the finance minister is critical for Pakistan as it seeks to negotiate a new SBA program with the IMF.

...

For further details see: