KARACHI: In a worrying development, the foreign exchange reserves held by the central bank decreased 3.34% on a weekly basis, according to data released on Thursday.
On August 31, the foreign currency reserves held by the State Bank of Pakistan (SBP) were recorded at $9,885.1 million, down $341.6 million compared with $10,226.7 million in the previous week.
The reserves have once again fallen below the $10-billion mark, raising concerns over the country’s ability to meet its financing requirements.
The decrease was attributed to external debt servicing and other official payments.
Overall, liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $16,369.7 million. Net reserves held by banks amounted to $6,484.6 million.
A month ago, China reportedly agreed to immediately give a loan of $2 billion to Pakistan, a move meant to arrest the slide in foreign currency reserves and provide much-needed breathing space for the new government.
Of the agreed amount, $1 billion had already been transferred to the central bank account. According to officials in the Ministry of Finance, the loan will be categorised as official bilateral inflow.
Earlier, the reserves had dipped to an alarmingly low level of $9.06 billion, forcing the central bank to let the rupee depreciate massively on four separate occasions since December 2017 and sparking concerns about the country’s ability to finance a hefty import bill as well as meet debt obligations in coming months.
In April, the SBP’s reserves had increased $593 million due to official inflows.
A few months ago, the foreign currency reserves surged due to official inflows including $622 million from the Asian Development Bank (ADB) and $106 million from the World Bank. The SBP also received $350 million under the Coalition Support Fund (CSF).
In January, the SBP made a $500-million loan repayment to the State Administration of Foreign Exchange (SAFE), China.
(This news/article originally appeared in The Express Tribune on September 7th, 2018)