Despite concerns in certain quarters, Pakistan on Friday met its payment obligations and paid the $1 billion it owed in Sukuk bonds to creditors.
With Pakistan’s foreign exchange reserves dipping to dangerously low levels, there were concerns whether Pakistan would be able to pay off its creditors or default.
But with Saudi Arabia agreeing to extend the term it would keep its $3 billion parked with the State Bank (SBP) and Pakistan receiving a $500 million injection from the Asian Infrastructure Investment Bank (AIIB) earlier in the week, the country managed to squeeze out $1 billion to pay creditors.
Islamabad was due to pay the $1 billion sukuk bond on December 5 but it paid the sum early.
One reason for the early payment is that December 5 would be a weekend. The other was that the early payment could enhance investor confidence in Pakistan.
The $1 billion sukuk bond was obtained about a decade ago, and early repayment would go some way in helping Pakistan secure funding this year.