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KARACHI: The country has successfully repaid over one-billion-dollar external debt to international financial institutions on Friday.

Although the country is facing a serious crisis of foreign exchange reserves, it is meeting international financial obligations to avoid default. Sources said that cumulatively, on Friday, the country repaid some $1.2 billion to the two foreign banks.

“Pakistan has paid back $600 million to the Emirates NBD Bank, the leading Banking Group in the MENAT region, and $420 million to the DIB on Friday,” sources in the State Bank of Pakistan (SBP) confirmed.

The country’s foreign exchange reserves are already sliding due to continued external debt servicing and slow foreign inflows. With the repayment of this loan, the country’s total liquid foreign exchange reserves further dipped by $1 billion.

Foreign exchange reserves at almost 9-year low level

Although the actual statistics of foreign exchange reserves will be released by the State Bank in its weekly report to be issued on Thursday, however, as per estimates, with the current repayment, the reserves held by the SBP would decline to $4.4 billion. However, overall foreign exchange reserves are likely to be around $10.3 billion.

The government has already taken a number of steps to curtail the import bill to manage its external debt obligations.

In addition, Pakistan is also making efforts to get loans from the other international lenders to build the depleting foreign exchange reserves and avoid default. Pakistan is also trying to finish the 9th IMF review so the other financial institutions like World Bank, Asian Infrastructure Investment Bank (AIIB), and other lenders may release their loans.

Prime Minister Shehbaz Sharif, on Saturday, has also requested the IMF chief for immediate completion of 9th review, so that the country can get the next tranche of Extended Fund Facility (EFF). “In a phone call with the Managing Director of the IMF yesterday, I told her about the government’s resolve to complete the terms of the IMF’s program. I also explained Pakistan’s economic difficulties especially after the devastating floods. The IMF delegation will come to Pakistan soon”, the Prime Minister said on twitter.

Sources said that the country’s foreign exchange reserves may further decline as the country has to pay back some more foreign debt in coming months.

Copyright Business Recorder, 2023

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