Pakistan''s foreign exchange reserves down by $811 million in one week on debt payment

The country''s total liquid foreign exchange reserves declined sharply by $811 million in a week due to external debt servicing. Sources said besides a minor payment, a major external debt payment of State Administration of Foreign Exchange (SAFE) China was due in the third week of January and accordingly, following the directives of the federal government, the State Bank of Pakistan (SBP) has paid the same.
Pakistan obtained an amount of $500 million from SAFE China as deposit in January 2009, when the country''s external account was weakening and the country''s foreign exchange reserves were declining sharply. Since then, this loan was being rolled over annually at the time of maturity as foreign exchange reserves were on the lower side.
However, instead of another rollover, the federal government decided to repay this loan at its maturity on 23rd January as presently the country''s foreign exchange reserves are stable and major microcosmic indicators are moving in a right direction.
According to SBP weekly foreign exchange report issued Thursday, the country''s total liquid foreign exchange reserves fell sharply by $811 million during last week. The total liquid forex reserves held by the country stood at $22.435 billion as on 27th January 2017 compared to $23.246 billion on 20th January 2017.
The detailed analysis revealed that a major decline has been witnessed in the SBP''s reserves as it has made payments of external debts.
During the week under review, the SBP''s reserves decreased by $790 million to slip below $18 billion mark. The SBP''s total reserves stood at $17.594 billion at the end of the week compared to $18.383 billion a week earlier.
"The decrease in the SBP''s reserves has mainly been attributed to external debt servicing, including $500 million loan repayment to State Administration of Foreign Exchange (SAFE), China," the SBP''s weekly report said.
Similarly, the reserves held by banks also posted some decrease during the last week. Reserves held by banks stood at $4.841 billion as on 27th January 2017 compared to $4.863 billion on 20th January 2017, depicting a decline of $22 million.