KARACHI: The country’s total liquid foreign exchange reserves further declined by $733 million in a week due to external debt servicing.
However, the State Bank of Pakistan (SBP) said on Thursday that reserves are expected to increase in coming days on realization of proceeds of Chinese loan.
Pakistan Wednesday signed a $2.3 billion commercial loan deal with China to build the foreign exchange reserves. As per the agreement, a Chinese consortium of banks will provide a loan facility of RMB 15 billion which is equal to $2.3 billion.
According to SBP, inflows from China are expected to arrive within a couple of days and will help to boost the sliding foreign exchange reserves. Pakistan’s foreign exchange reserves continued to decline due to lower foreign inflows and higher external debt and other official payments.
According to the weekly foreign exchange report issued by the State Bank on Thursday, the total liquid foreign exchange reserves held by the country stood at $ 14.21 billion as of Jun 17, 2022 compared to $ 14.943 billion as of June 10, 2022.
During the week under review, the SBP reserves decreased by $ 748 million to $ 8.238 billion down from $ 8.985 billion mainly due to external debt repayments. However, reserves held by the commercial banks rose by $ 15 million to $ 5.973 billion at the end of last week.
Overall, during the last three weeks, the country’s foreign exchange reserves dropped by $1.56 billion. The country’s total liquid foreign exchange reserves stood at $15.771 billion as of May 27, 2022 as against $14.210 billion as of June 17, 2022.
The SBP said that its reserves are expected to increase in coming days on realization of proceeds of CDB loan.
In addition, the government is also making efforts for the release of a tranche of the IMF’s Extended Fund Facility (EFF) programme, which is likely to approve and arrive very soon.
Analysts said that expected foreign inflows from China and the IMF not only build the depleting foreign exchange reserves of the country but also open the blocked financing pipelines.
Copyright Business Recorder, 2022
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