SBP foreign reserves increased to $4.6b
Pakistan’s foreign currency reserves increased by 2.3 and present gross foreign reserves to $10.14 billion.
State Bank of Pakistan (SBP) holdings also rose on inflows from China, the central bank announced on Friday.
the central bank’s foreign exchange reserves are more important as they are mostly used to service external debt. The State Bank also injects dollars into the interbank market to increase liquidity to meet market demand, thereby strengthening the exchange rate.
Due to dwindling forex holdings amid declining exports and remittances, Pakistan is facing difficulties in the timely repayment of foreign debts.
The need for successful timing with the IMF and the decisive results so far are taking a heavy toll on the economy with multiple adverse effects pushing Pakistan closer to default.
The economic managers of the country believe that the release of the IMF tranche will increase the income from other sources like the Middle East and China’s friendly countries and restore the confidence of the capitalists.
The central bank’s reserves increased by $280 million to $4.6 billion during the week, following a $500 billion trade loan from China.
“After accounting for external debt repayments, SBP’s reserves increased by $280 million to $4.599bn during the week,”
an SBP spokesperson said on Friday.
The government needs about $6 billion to satisfy the IMF. Staff-level talks with the lender are still incomplete as the lender is said to be demanding that Pakistan cover the $6 billion financing gap before the release of the $1.1 billion tranche of the fund. Therefore, written assurances must be submitted from friendly countries.
The long-term protracted negotiations with the IMF are taking a heavy toll on the economy, with multiple adverse effects pushing Pakistan closer to default. The country’s economic managers believe that the release of the IMF tranche will increase revenue from other sources, such as the Middle East and China’s friendly countries.
