SBP’s foreign exchange reserves show a slight increase
Foreign exchange reserves held by the State Bank of Pakistan (SBP) saw a small increase as the cash-strapped country tries to woo the International Monetary Fund (IMF) to release a $1.1 loan tranche which he so badly needs.
In a statement, the central bank – without mentioning the reason – said its reserves had increased by $66 million to $3,258.5 million at the end of the week of February 17 – enough for about three weeks of trading. ‘imports.
Net foreign exchange reserves held by commercial banks amounted to $5,468.0 million, $2,209.5 million more than the SBP, bringing total liquid foreign exchange reserves to $8,726.5 million of dollars.
The Washington-based lender and Pakistani authorities began talks on Wednesday – days after an IMF mission left Islamabad without signing a staff agreement despite 10-day talks.
Foreign exchange reserves are expected to increase next week as the China Development Bank’s board approved a $700 million facility for Pakistan, according to Finance Minister Ishaq Dar, and the funds could be deposited in the SBP account this week.
“IMF program will be revived soon, InshaAllah, because there are one or two things left to implement,” Prime Minister Shehbaz Sharif said during his address to the Federal Cabinet in Islamabad.
In an effort to resume the delayed IMF program and avoid a default, the incumbent government has taken measures over the past two months, ranging from adding new taxes to raising energy prices. and the relaxation of its control over the rupee.
Parliament last Monday approved the Supplementary Finance Bill which increases sales tax from 17% to 25% on imports ranging from cars and household appliances to chocolates and cosmetics.
People will also have to pay more for business class air travel, wedding venues, cellphones and sunglasses. A general sales tax was increased from 17% to 18%.
To be sure of austerity measures Amid the economic crisis starting at the top, Prime Minister Shehbaz on Wednesday unveiled cost-cutting measures to save $764 million a year.
“It’s the need of the hour,” he said after the cabinet meeting. “We have to show what the time demands of us, which is austerity, simplicity and sacrifice.”
Fitch Ratings – a global credit rating agency – downgraded the economy by $350 billion twice in four months, citing dwindling foreign exchange reserves.
Bloomberg data shows that Pakistan has redeemed coupons of $542.5 million this year. In total, the country has $8 billion in bond debt due by 2051 with the next payment of $1 billion due in April next year. Most of the country’s external debt, which amounts to around $100 billion, comes from multilateral and bilateral concessional sources.
Not only debt, but Pakistan is also facing a dollar crisis that is testing its external stability. Supply disruptions caused by floods, food shortages and government action to meet IMF bailout preconditions could push inflation above 30% for the first time on record, according to Bloomberg Economy.