KARACHI: Pakistan’s total liquid foreign currency reserves crossed the $24 billion mark during last week supported by the arrival of healthy inflows from China and the World Bank.
According to the weekly report of foreign exchange reserves issued by the State Bank of Pakistan (SBP) on Thursday, the foreign exchange reserves held by the country rose by $1.175 billion to reach $24.415 billion during the week ended on July 2, compared to $23.297 billion as on June 25, 2021.
Overall Pakistan received some $1.44 billion as loan inflows from the two resources including China and World Bank to build the foreign exchange reserves and ease the pressure on the external account.
During the week under review, the SBP received $1 billion as government of Pakistan loan disbursement from China and $440 million from World Bank. After accounting for external debt repayments and other official payments, the SBP’s reserves increased by $1.112 billion to $17.231 billion at the end of last week, up from $16.119 billion a week earlier.
According to SBP, during the last week, foreign currency reserves held by the commercial banks also slightly mounted up by $5.8 million to $7.183 billion.
Economists said in order to ensure external debt sustainability, there was a need to shore up the level of country's foreign exchange reserves and these inflows have build-up the country’s foreign exchange reserves. The rising foreign exchange reserve will help to smoothly pay off the debt obligations in the future, they added.
A sizable improvement in the current account position, during the last fiscal year, also largely contributed to buildup the foreign exchange reserves.
Pakistan had received a number of foreign inflows during FY21. This included $2.5 billion proceeds against Eurobond issuance. After a gap of over three years, Pakistan entered the international capital market for the sale of Eurobonds. Accordingly, a multi-tranche transaction of 5-, 10- and 30-year Eurobonds was conducted to build up the foreign exchange reserves. In addition, in the last week of March, Pakistan received around $500 million from the International Monetary Fund (IMF) as a loan tranche under Extended Fund Facility (EFF) for budget support.
During June-2021, Pakistan also received proceeds of Wapda Green Eurobond, amounting to $499.0 million. All these inflows helped to build the foreign exchange reserves.
Copyright Business Recorder, 2021