Alarming: SBP-held foreign exchange reserves fall another $179mn, now stand at $3.91bn

Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased by $179 million, clocking in at nearly $3.91 billion as of June 2, 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 $9.33 billion. Net foreign reserves held by commercial banks clocked in at $5.42 billion.

“During the week ended on June 2, 2023, SBP reserves decreased by $179 million to $3,912.2 million due to external debt payments,” said the SBP.

Last week, SBP’s foreign exchange reserves decreased by $102 million, clocking in at nearly $4.09 billion.

Pakistan’s reserves got a boost after the country received $300 million from the Industrial and Commercial Bank of China Ltd (ICBC), the last of three disbursements.

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

Moreover, China 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).

On Thursday, it was reported that Pakistan has to satisfy the IMF on three counts, starting with a budget to be presented on Friday, before its board will review whether to release at least some of the $2.5 billion still to be disbursed under a lending programme that will expire at the end of this month.

Esther Perez Ruiz, the IMF’s resident representative for Pakistan, that there was only time for one last board review before the scheduled end of the $6.5-billion Extended Fund Facility (EFF).

“As communicated to the authorities, there can be one remaining Board meeting under the current EFF at end-June,” Perez Ruiz said in an email response to Reuters.

“To pave the way for a final review under the current EFF, it is essential to restore the proper functioning of the foreign exchange market, pass a FY24 budget consistent with programme objectives, and secure firm and credible financing commitments to close the $6 billion gap ahead of the Board,” she added.