On back of another loan, SBP-held forex reserves rise $394mn, now stand at $4.43bn

Foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $394 million, clocking in at $4.43 billion as of April 14, 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 $9.96 billion. Net foreign reserves held by commercial banks clocked in at $5.53 billion.

“During the week ended on April 14, 2023, SBP reserves increased by $394 million to $4,432.5 million. The increase in SBP reserves is mainly due to receipt of $300 million of commercial loan,” said a statement from SBP.

Last week, SBP’s reserves decreased by $170 million.

On April 14, Finance Minister Ishaq Dar announced that Pakistan was set to receive $300 million from the Industrial and Commercial Bank of China Ltd (ICBC), the last of three disbursements.

“Out of Chinese bank’s ICBC-approved facility of $1.3 billion (which was earlier repaid by Pakistan), State Bank of Pakistan (SBP) would receive back third and last disbursement today in its account amounting to $300 million,” Dar had said on Twitter.

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.

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.

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

Earlier, Prime Minister Shehbaz Sharif said that Pakistan had fulfilled all conditions laid down by IMF for disbursement of next tranche of loan.

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.