With the arrival of the much-awaited Coalition Support Fund (CSF) inflows, the country's foreign exchange reserves again crossed $22 billion mark at the end of last week. The State Bank of Pakistan (SBP) in its weekly foreign exchange reserves report, issued Thursday, revealed that the country received CSF inflows amounting to $350 million during last week. The country is estimating some $1 billion payment under the CSF during this fiscal year and this is the first tranche of the CSF inflows, which was being expected in the first quarter of FY17.
The delay in arrival of the CSF payments also led to higher services trade deficit, which surged by 30 percent to $1.98 billion during July-January of FY17. However, with arrival of the CSF payment, the services trade deficit is likely to reduce in coming months.
After reaching all-time high level of $24.46 billion in the third week of October 2016, the country's foreign exchange reserves were under pressure for the last four months due to continuous external debt payments. The reserves reached below $22 mark in the last week of February. In January, the SBP also made a major debt payment of $500 million to China. The amount was borrowed a few years back, when the country's reserves were on decline.
Economists say that with arrival of the CSF inflows, pressure on the country's foreign exchange reserves will reduce in coming months. According to State Bank, the country's total liquid forex reserves rose by $329 million to reach $22.152 billion as on March 3, 2017 compared to $21.823 billion on February 24, 2017. During the week under review, the SBP's reserves increased by $289 million to $17.140 billion up from $16.851 billion supported by $350 million CFS payment. During last week, the SBP also made payments of $62 million on account of external debt servicing. Similarly, reserves held by banks posted an increase of $40.3 million to $5.012 billion at the end of last week up from $4.972 billion a week earlier.
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