- Official inflows add to the foreign exchange reserves of the SBP.
- The central bank’s reserves increased by $393 million to $4.462 billion.
- The cost of insuring Pakistan’s debt against default has come down significantly.
KARACHI: Foreign exchange reserves held by Pakistan’s central bank increased by $393 million to $4.462 billion in the week ended June 30, the State Bank of Pakistan reported on Thursday.
Accordingly, the central bank’s total reserves increased by $405 million to $9.745 billion, while commercial banks’ reserves increased by $12 million to $5.282 billion. news,
The SBP attributed the increase in foreign exchange reserves to receipt of official inflows.
The country repaid a $1.3 billion foreign loan to China last month, but as per the agreement with Pakistan, Beijing refinanced it with Islamabad to shore up its dwindling foreign exchange reserves and prevent default.
The due date for $1.3 billion in Chinese commercial loans was June. As per the schedule, Pakistan repaid a loan of $300 million to the Bank of China and $1 billion to the China Development Bank.
China has refinanced matured commercial loans worth $1.3 billion, which Pakistan had requested for early refinancing. Of the total funding, $1.3 billion was received last month.
Reserves are expected to improve as a result of the IMF deal.
SBP governor Jameel Ahmed said at an event on Tuesday that the IMF bailout would help in boosting the country’s foreign exchange reserves.
He said Pakistan has repaid all its debt to foreign lenders on time and flows are expected to improve, which will be beneficial.
The cost of insuring Pakistan’s sovereign debt against default has come down significantly due to the growing belief by foreign investors that Pakistan’s default risk has been eliminated, at least as long as it is an International Monetary Fund (IMF) program. Not there.
Pakistan last week reached a staff-level agreement with the IMF to release $3 billion in crucial bailout funds after a long, drawn-out review process for the cash-strapped economy since November last year.
The Extended Financing Facility program, which was signed in 2019, expired on Friday. The agreement is therefore under a stand-by arrangement (SBA).
According to the IMF’s announcement to the media, the Executive Board will meet on July 12, 2023, to discuss details regarding the nine-month SBA.
