Moody’s Investors Service on Wednesday said Pakistan is feared to fail on reviving the International Monetary Fund (IMF)’s stalled loan program worth $6.7 billion by the time it officially expires in two weeks on June 30.

Without the IMF on board, the risk of the nation’s default on foreign debt repayment has sharpened amid the country’s foreign reserves falling critically low below $3 billion after Pakistan successfully repaid a commercial loan of $1 billion to China earlier than its maturity.

The low reserves, which barely provide cover for three-week imports, may mount pressure on the rupee against the US dollar which was trading at Rs287/$ in the inter-bank market on Wednesday. It is pertinent to note that on May 11 it was just Rs12 away from a record low hit at Rs299/$ amid high political drama and poor law and order situation. Global news agency Bloomberg cited Moody’s saying Pakistan is at an increased risk of failing to restart its $6.7 billion bailout programme with the IMF, putting the South Asian country closer to a sovereign default.

“There are increasing risks that Pakistan may be unable to complete the IMF programme that expires at the end of June,” said Grace Lim, a sovereign analyst with the rating company in Singapore. “Without an IMF programme, Pakistan could default, given its very weak reserves.” Pakistan repaid $1 billion to China earlier than its maturing due date in late June under an understanding that Beijing would refinance the commercial loan to Islamabad before the outgoing fiscal year ends on June 30.

The country is making a final effort to revive its IMF programme, with a financing gap of $2 billion and exchange-rate policy among the biggest hurdles.

While the government has pledged to meet billions of debt obligations, investors remained skeptical about the nation’s dollar bonds trading in the distressed territory since last year, the news agency said. Pakistan faces about $23 billion of external debt payments for the fiscal year 2024, which begins in July. On Monday, central bank Governor Jameel Ahmad denied that officials were seeking debt restructuring talks as Pakistan will pay $900 million of sovereign debt in June and expects $2.3 billion of obligations to be rolled over.

The country’s $1 billion bond due in April next year was slightly changed at about 55.6 cents on the dollar in Asian trading on Wednesday, after sliding almost three cents in the previous two days.