SBP-held forex reserves fall $74mn, now stand at $4.38bn

Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased by $74 million, clocking in at $4.38 billion as of May 5, data released on Thursday showed.

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 $9.99 billion. Net foreign reserves held by commercial banks clocked in at $5.61 billion.

“During the week ended on May 5, 2023, SBP reserves decreased by $74 million to $4,383.4 million due to external debt repayment,” said SBP in a statement.

Last week, foreign exchange reserves decreased by $6 million to $4.46 billion.

Earlier, Pakistan received $300 million from the Industrial and Commercial Bank of China Ltd (ICBC), the last of three disbursements.

Cumulatively, Pakistan has received $2 billion from Chinese institutions. This includes $700 million from the China Development Bank and $1.3 billion from ICBC.

Moreover, China has also rolled over a $2-billion loan, lending further support to Pakistan’s faltering dollar reserves.

The critical level of foreign exchange reserves underscores the need for revival of the stalled programme with the International Monetary Fund (IMF).

While Pakistan is currently engaged in talks over its revival, the IMF has said it is looking forward to obtaining the necessary financing assurances as soon as possible to pave the way for the successful completion of the 9th Extended Fund Facility (EFF) review.

On Thursday, reports stated that IMF remains engaged with Pakistan for revival of the deal.

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

A shortage of foreign currency reserves has also 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.

In March, Pakistan reported a massive current account surplus of $654 million due to import curbs while imports shrank by a huge proportion in April.