Uptick at last: State Bank of Pakistan foreign reserves increase to $4.6b

The foreign exchange reserves of the State Bank of Pakistan (SBP) dropped to $4.34 billion, the lowest since February 2014, as the central bank said the amount decreased by $1.23 billion during the week ending on Jan 6 due to external debt repayments.

However, net foreign exchange reserves held by commercial banks amounted to $5.84 billion while the total liquid foreign exchange reserves were $10.18 billion.

In the absence of any dollar inflows from the International Monetary Fund (IMF) or friendly countries, the country has been facing a serious dollar shortage, which is resulting in restricted imports of even food and industrial raw materials. The latest position of foreign exchange reserves reflects that the country doesn’t have sufficient dollars to cover even one month of average imports.

Manufacturers associated with the Karachi Chamber of Commerce and Industry claimed recently that banks weren’t even processing $1,500 payments for the import of spare parts — a phenomenon that’s bringing the entire supply chain to a standstill.

But there may be a lifeline as the United Arab Emirates (UAE) on Thursday agreed to rollover the current $2 billion loan and provide another $1 billion.

Moreover, Pakistan also inked an agreement with the Saudi Fund for Development (SFD) on Thursday to finance oil derivatives worth $1 billion.

On Tuesday, Saudi Arabia’s Crown Prince Mohammed bin Salman had directed the authorities concerned to study increasing the kingdom’s investments in Pakistan to $10 billion. He also directed the SFD to study boosting the Saudi deposit to Pakistan’s Central Bank to $5 billion.

Earlier this week, Pakistan was able to obtain pledges worth over $9 billion from different donors and friendly nations at a conference held in Geneva, which was held in connection with the devastation caused by unprecedented monsoon rains floods in the country last year.

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