- Country’s reserves were constantly on decline due to scheduled external debt servicing and financing of current account deficit
KARACHI: The country’s total liquid foreign exchange reserves rose sharply by some $2 billion during the last week supported by the arrival of Chinese inflows.
According to weekly foreign exchange report issued by the State Bank of Pakistan (SBP) on Thursday, the total liquid foreign exchange reserves held by the country stood at $ 16.196 billion as of Jun 24, 2022 as against $14.21 billion as of June 17, 2022, depicting an increase of $1.98 billion in a week.
During the period under review, the entire improvement was witnessed in the SBP’s reserves, while the reserves held by commercial banks declined slightly.
During the week ended on 24 June, 2022, the SBP received proceeds of Chinese Development Bank loan amounting to RMB 15 billion, which was equal to $2.3 billion. After accounting for external debt repayment, SBP’s reserves increased by $ 2.071 billion to $ 10.309 million up from $8.238 billion a week earlier.
Net foreign reserves held by commercial banks decreased by $86 million to $ 5.886 billion as of June 24, 2022 compared to $5.972 billion as of June 17, 2022.
The surge in the foreign exchange reserves was recorded after a gap of many months as the country’s reserves were constantly on decline due to scheduled external debt servicing and financing of current account deficit.
Pakistan and China, on June 23, signed a commercial loan deal of RMB 15 billion to boost the sliding foreign exchange reserves of the country. Agreed Chinese consortium loan of RMB 15 billion (roughly $2.3 billion) was credited into SBP account on June 24, 2022.
The government is also hoping to receive some $2 billion from the IMF under the 7th and 8th review of the Extended Fund Facility (EFF) program next month.
Presently, the country is facing a cash crisis due to massive external payments and lower foreign inflows.
Cumulatively, the country recorded a $15.199 billion current account deficit during July-May of FY22 compared to $1.183 billion in the same period of last fiscal year (FY21), depicting an increase of $14.016 billion The major reason for the widening current account gap is the uptick in the trade deficit.
Copyright Business Recorder, 2022