Moody’s Investors Service and Fitch Ratings have warned of a “continuous threat” to Pakistan’s financing sustainability despite reaching a Stand-by Agreement with the International Monetary Fund last week, Bloomberg reported on Monday.

The country is expected to pay $25 billion in debt repayment during the fiscal year 2023-24, it added.

Krisjanis Krustins, director of sovereigns for APAC at Fitch, said Pakistan would require significant additional financing besides the IMF disbursements to meet its debt maturities and finance an economic recovery.

“While the IMF likely sought and received assurances for such financing, there is a risk that this could prove insufficient, particularly if current account deficits widen again,” Krustins was quoted as saying by Bloomberg.

Pakistan has taken a number of measures to meet the conditions of the global lender, which include hiking taxes, raising its key interest rate to an all-time high and cutting spending to secure the initial pact with the IMF, which is subject to approval by the IMF Executive Board.

The latest programme, however, sent positive sentiments through the markets, with stocks surging the most on Monday and dollar bonds extending their best run ever.

Moody’s analyst Grace Lim told Bloomberg that “it is uncertain that the Pakistani government will be able to secure full $3 billion of IMF financing during the nine-month stand-by arrangement programme”.

The $25 billion of debt repayments includes both principal and interest and is about seven times Pakistan’s foreign exchange reserves, according to Moody’s.

The government’s commitment to continually implement reforms will be tested as it goes into elections due by October 2023, said the analyst.

The country had previously clinched a $1.1 billion loan in August 2022, only to have the programme halted due to the government’s failure to meet some prerequisite conditions.

“Whether Pakistan will join another IMF programme may only become clear after elections,” Lim said. “Until a new programme is agreed, Pakistan’s ability to secure loans from other bilateral and multilateral partners on an on-going basis over the longer-term will be severely constrained.”

On June 30, the IMF announced that its staff and Pakistani authorities reached a nine-month SBA for $3-billion. The staff-level agreement is subject to approval by the IMF Executive Board, with its consideration expected by mid-July.

“The new SBA builds on the authorities’ efforts under Pakistan’s 2019 Extended Fund Facility-supported programme which expires end-June,” Nathan Porter, IMF Mission Chief to Pakistan, was quoted as saying in the press release on the day the EFF expired.