Minor relief: SBP-held foreign exchange reserves rise $66mn, now stand at $3.26bn

Foreign exchange reserves held by the State Bank of Pakistan (SBP) increased $66 million to $3.26 billion, data released on Thursday showed. This is the second successive increase on a weekly basis.

Total liquid foreign reserves held by the country stood at $8.73 billion. Net foreign reserves held by commercial banks stood at $5.47 billion.

Minor relief: SBP-held foreign exchange reserves rise $276mn, now stand at $3.19bn

“During the week ended on February 17, 2023, SBP’s reserves increased by $66 million to $3,258.5 million,” SBP said in a statement.

Last week, foreign exchange reserves held by SBP increased $276 million to $3.19 billion. This was the first increase in reserves after three weeks.

The central bank reserves, which stood at nearly $18 billion at the start of 2022 but have undergone significant depletion in recent months, underscore the urgent need for Pakistan to complete the next review of the International Monetary Fund (IMF) programme.

The reserves’ level is at less than one month of import cover.

An IMF delegation left Pakistan earlier during the month without a staff level agreement. However, Finance Minister Ishaq Dar notified the receipt of Memorandum of Economic and Financial Policies (MEFP).

Talks on the ninth review have remained stalled since November last year over prior conditions of the Washington-based lender that has called for a market-determined exchange rate, resolution of issues within the power sector, and a roadmap for achieving tax targets.

President Dr Arif Alvi and the parliament also approved the Finance (Supplementary) Bill 2023, moving a step closer towards convincing the lender to revive the bailout programme. The bill, also known as the mini-budget, will impose new taxes worth Rs170 billion.

The scramble to secure dollar inflows comes in tandem with Pakistan’s restriction on imports that have also resulted in businesses either scaling back or shutting down operations after their inability to open letters of credit (LC) amid the foreign currency shortage.

However, in a positive turn of events, Dar shared that the Board of China Development Bank (CDB) approved the disbursement of $700 million for Pakistan.

“Formalities completed and Board of China Development Bank has approved the facility of $700 million for Pakistan,” Dar announced on Twitter.