Pakistan could default without an International Monetary Fund (IMF) bailout package as its financing options beyond June are uncertain, Moody’s Investor Service warned on Tuesday.

According to the Bloomberg, Grace Lim, a sovereign analyst with the ratings company in Singapore, said that Pakistan’s financing options beyond June are highly uncertain and the South Asian country can “default” given its very weak reserves. “We consider that Pakistan will meet its external payments for the remainder of this fiscal year ending in June. However, Pakistan’s financing options beyond June are highly uncertain. Without an IMF program, Pakistan could default given its very weak reserves,” Bloomberg said while quoting Grace Lim.

The report further highlighted that Islamabad is struggling to restart a $6.5 billion bailout programme from the Washington-based lender, which has stalled after the government failed to meet some the loan conditions.

The report said: “Political tensions ahead of elections due this year are adding to the risk of a delay in the loan, as former premier Imran Khan is showing no signs of backing down against the government and military.”

An engagement with the IMF beyond June would support additional financing from other multilateral and bilateral partners, which could reduce default risk, Lim said in an emailed response to questions Monday.

Pakistan’s foreign-exchange reserves — which stand at $4.5 billion — remain extremely low and sufficient to cover only about one month of imports, she said.

Pakistan’s gross external financing needs as a proportion of current-account receipts plus usable reserves is estimated to rise to 139.5% in fiscal year 2024 from 133% in 2023, according to S&P Global Ratings.

“We consider the IMF program to be a foundation for important fiscal policy reforms,” said Andrew Wood, a sovereign analyst at S&P in Singapore. “Agreement on the current review cycle could also coalesce more confidence for other bilateral and multilateral lenders to Pakistan.”

It is pertinent to mention here that the IMF issued the schedule of board meetings in which Pakistan is not included in any agenda until May 17.

Funding will also not be available from international financial institutions as the staff-level agreement is not reached, moreover, the budget-making process can be affected if transactions with the IMF are not concluded.