SBP-held forex reserves fall $36mn, now stand at $4.21bn

Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased $36 million, clocking in at $4.21 billion as of March 31, data released on Thursday showed.

The overall number stands at a critical level at around a month of import cover.

Total liquid foreign reserves held by the country stood at $9.76 billion. Net foreign reserves held by commercial banks clocked in at $5.55 billion.

“During the week ended on March 31, 2023, SBP’s reserves decreased by $36 million to $4,207.9 million due to debt repayments,” said a statement from SBP.

Last week, SBP-held reserves decreased $354 million to $4.2 billion.

Last 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.

Moreover, China has also rolled over a $2-billion loan.

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.

On Thursday, Minister of State for Finance Aisha Ghaus Pasha said the IMF has indicated that Saudi Arabia has also given its assurance to the lender that it will provide a $2 billion loan to Pakistan.

However, the IMF agreement still rests on a similar commitment from the United Arab Emirates for a $1 billion loan.

A shortage of foreign currency reserves has 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.