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As the government struggles to secure a bailout from the International Monetary Fund (IMF), Fitch Ratings on Friday revealed that Pakistan faces a total of $3.7 billion of debt payments in the May-June period, Bloomberg reported.

Hong Kong-based director at Fitch, Krisjanis Krustins, said about $700 million of maturities are due in May and another $3 billion in June.

In an emailed response to questions, Fitch told Bloomberg that it expects $2.4 billion of deposits and loans from China will be rolled over.

Pakistan, which has been negotiating to restart a $6.5 billion bailout with the IMF for about half a year, is racing to avert a default as the foreign exchange reserves — which currently provide an import cover of nearly one month — come under pressure. The country has secured financing support from countries in the Middle East and China, a key IMF condition.

“Our base case is still that Pakistan and the IMF will reach an agreement on the programme review,” Krustins said. But the risks are large and the rating cut in February reflected that a default or debt restructuring is an increasingly real possibility, he added.

The debt payments underscore the crucial need for Pakistan to resume its bailout programme with the Washington-based lender that has been stalled since November last year.

The $1.1 billion tranche is part of a $6.5 billion bailout package the IMF approved in 2019, which is due to end in June, prior to the budget. So far, Pakistan has received $3.9 billion.

The country is reeling from an economic crisis with inflation surging to 36.4%, the highest in its history and the highest in South Asia, while a bruising political battle is raging between the government and former prime minister Imran Khan.

The government has removed caps on the exchange rate, imposed taxes, raised energy tariffs, and scaled back subsidies in an attempt to unlock the IMF funding. It has also raised key interest rates to a record 21%.

Finance Minister Ishaq Dar, since he was sworn in September, has been claiming that “there’s no way Pakistan is going to default”, however, leaders of the ruling alliance and the PTI constantly claim that the country is on the brink of default.

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