SBP's forex reserves continue to decline owing to loan repayment
Business
The reserves dropped to $4.38 billion in the week ending May 5
KARACHI (Web Desk) - The State Bank of Pakistan’s (SBP)-led foreign exchange reserves on Thursday continued to decline owing to repayments of external loan, sending a wave of "disappointment" among the government ranks as the country is still looking to the global lenders for seeking more loans.
The reserves dropped to $4.38 billion in the week ending May 5, the central bank's data showed. In its weekly bulletin, the SBP said its reserves plunged by $74 million due to external debt repayment.
It further said net reserves held by commercial banks stood at $5.61 billion, around $1.23 billion less than the SBP’s reserves, taking the country’s total liquid foreign reserves to $9.99 billion.
In the previous week ending on April 28, 2023, total liquid foreign reserves held by the country was $10,043.2m. Among them, foreign reserves held by the central bank were $4,457.2m, while net foreign reserves held by commercial banks were $5,586m.
Pakistan’s foreign reserves have fallen sharply in recent months to a critically low level. The current reserves are not sufficient for even a month’s imports.
Earlier this week, Moody’s Investor Service warned that the country could default without an International Monetary Fund (IMF) programme as its foreign exchange reserves were “very weak”.
The government has been in talks with the Washington-based lender since November for the release of a $1.1 billion tranche. However, a staff-level agreement (SLA) is yet to be signed despite the government’s claim that it has fulfilled all IMF conditions.
The revival of the stalled loan programme won't only release the tranche which is desperately needed to avert a default, but also unlock funding from other multilateral institutions.
However, the reserves rose by $394m in the week ending on April 21, 2023. According to the SBP, on the week ending on April 14th, the forex reserves of the country increased from $9.56bn to the level of $9.965 approximately.
The reserves held by central bank increased by $394m and reached $4.432bn whereas the reserves of commercial banks posed increase of $6.2m and reached $5.532bn.
