SBP-held forex reserves increase $280mn, now stand at $4.6bn

Foreign exchange reserves held by the State Bank of Pakistan (SBP) increased $280 million, clocking in at $4.6 billion as of March 17, data released on Friday showed.

This is the sixth successive increase in central bank-held reserves on a weekly basis, but the overall number still stands at a critical level at around a month of import cover.

Total liquid foreign reserves held by the country stood at $10.14 billion. Net foreign reserves held by commercial banks clocked in at $5.54 billion.

“During the week ended March 17, 2023, SBP received $500 million as government of Pakistan commercial loan disbursement. After accounting for external debt repayments, SBP’s reserves increased by $280 million to $4,598.7 million,” said the SBP.

Last week, foreign exchange reserves held by the SBP increased $18 million.

Earlier during the month, Pakistan received the second disbursement of $500 million from the Industrial and Commercial Bank of China (ICBC). Cumulatively, Pakistan has received $1.7 billion from Chinese institutions with another $300 million expected.

However, the critical International Monetary Fund (IMF) programme remains stalled as talks continue after Pakistan announced a new fuel subsidy.

A delay in an agreement with IMF is taking a toll on the economy, particularly the rupee.

A shortage of foreign currency reserves has put added pressure on the economy that relies heavily on imports to run its engines. While the SBP has put some curbs on inward shipments, reducing the current account deficit in the process, many businesses have been forced to either shut down or scale back operations as policymakers scramble to arrange dollar inflow.