SBP-held foreign exchange reserves rise $258 mn, now stand at $4.6bn

Foreign exchange reserves held by the State Bank of Pakistan (SBP) rose by $258 million to $4.6 billion, data released on Thursday showed.

Total liquid foreign reserves held by the country stood at $10.44 billion. Net foreign reserves held by commercial banks stood at $5.84 billion. According to AHL, this is the first increase in reserves in 8 weeks.

“During the week ended on January 13, 2023, SBP’s reserves increased by $258 million to $4,601.2 million,” SBP said in a statement.

In the previous week, foreign exchange reserves held by the SBP had fallen by a hefty $1.23 billion to a highly critical level of $4.34 billion.

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

As of now, talks on the ninth review seemed to have stalled over some prior conditions of the Washington-based lender.

Although the country is facing a serious crisis of foreign exchange reserves, it is meeting international financial obligations to avoid default.

At the same time, policymakers are scrambling to secure inflows of dollars.

On Wednesday, Governor State Bank of Pakistan (SBP) Jameel Ahmad said that the UAE has rolled over $2 billion loan and assured the businessmen of facilitating their imports on a suppliers’ credit. He also said that Pakistan’s foreign exchange reserves position will improve as the country is expected to witness inflows of funds in the coming days.

Earlier, Pakistan also signed an agreement with the Saudi Fund for Development (SFD), a Saudi Arabian government agency that provides development assistance to developing countries, to finance oil derivatives worth $1 billion to Pakistan.

Pakistan also secured pledges of nearly $10 billion at the ‘International Conference on Climate Resilient Pakistan’ in Geneva earlier this week. However, 90% of the commitments are project loans, and will be part of inflows when projects start to materialise.

Experts believe the inflows are still not nearly enough to meet Pakistan’s bulging import needs, which have been fiercely tamed in view of the dollar shortage.