The foreign exchange reserves held by the State Bank of Pakistan (SBP) have crossed $4 billion after the country’s liquidity crunch took over. A loan of 500 million dollars from a Chinese bank.
The central bank said in a statement that foreign exchange reserves increased by $487 million to $4.301 million in the week ended March 3, covering nearly a month of imports.
The SBP received $500 million from the Industrial and Commercial Bank of China (ICBC) last week, days after receiving $700 million from the China Development Bank as part of the institution’s $1.3 billion facility.
Pakistan has received funds from no friend other than China as the $350 billion economy struggles to recover from a stalled International Monetary Fund (IMF) program.
Cash-strapped Pakistan is scrambling to protect it IMF help to avoid debt defaults, unlock additional financing and avoid severe supply shortages. According to Fitch Ratings, there are $7 billion in repayments in the coming months, including a $2 billion Chinese loan due in March.
The country will have to repay about $3 billion in future installments, while $4 billion is expected to be remitted, SBP Governor Jameel Ahmad said at an analysts’ briefing after the announcement of the monetary policy rate hike until May 27. the highest rate of the year is 20%.
But as the IMF deal sees a deal, the Pakistani rupee has fallen to a historic low, closing at 282.30 per dollar on the interbank market – and if all goes well for Pakistan in the coming days, analysts believe the local currency will only recover. up to 265.
Speaking at the event on Thursday, Minister of Finance Ishaq Dar The IMF said it was “satisfied” with Pakistan’s actions, but that a staff-level agreement could not be signed this week.
“It looks like we are very close to signing a staff-level agreement in the next few days,” Dar said while addressing a seminar on “Restoring Economic Stability through Strengthening Public Financial Management” in the federal capital.
Due to the shortage of dollars, the government also imposed restrictions on imports, resulting in the partial shutdown of not only textile but also automobile manufacturers, raising fears of unemployment.