Pakistan will step into the new year with uncertainty. Come January, Islamabad will be required to make repayments of $1 billion to two commercial banks in the Gulf. In the next three months the country will have to make a repayment of $8.3 billion amid thinning foreign exchange reserves.

Local newspaper, The News said that in January alone, Islamabad will have to repay $600 million on account of commercial loans out of which $400 million will be paid back to a Dubai-based bank.

The debt repayment also includes $2 billion from the UAE. However, according to reports, the Shehbaz Sharif government is expecting a rollover of the same.

The news organisation said that Pakistan has so far received $5.11 billion as bilateral and multilateral loans and grants in the first five months of the current fiscal year. “Ironically, the government could only muster up $200 million through commercial loans in the first five months out of the total budgeted amount of $7.47 billion,” it said.

Recently S&P Global Ratings downgraded Pakistan’s long term sovereign credit rating to ‘CCC+’ from ‘B-‘. The ratings agency also said that Pakistan’s foreign exchange reserves will continue to remain under pressure in the coming year as well.

Earlier, ratings agencies Moody’s and Fitch too downgraded Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘CCC+’ from ‘B-‘. This will make borrowing even tougher and the country will find it tough to manage a debt repayment of over $30 billion this fiscal year.

Pakistan while securing the loans was hoping that the lenders would extend repayment at the time of maturity. However with the downgrade in ratings, challenges for Islamabad will rise.

Concerns have risen after the International Monetary Fund’s (IMF) delay in holding the ninth review meeting of Pakistan’s ongoing loan programme.

After the delay in IMF’s review meeting other multilateral and bilateral creditors too have become cautious.

The IMF has twice postponed its next programme performance review, delaying the disbursement of the $1.2bn tranche, local newspaper Dawn said. The country’s foreign exchange reserves are now just above the $6 billion mark.

Pakistan’s Finance Minister Ishaq Dar is putting up a brave face. “Not a day passes that I don’t hear speculations of a default. There’s no chance of Pakistan defaulting on its debt payments,” he said addressing investors through a video link.

Also read: Security threats from TTP will further cripple Pakistan’s economy