SBP’s foreign reserves drop to $9.7 billion

Due to external loan repayments, the State Bank of Pakistan’s (SBP) total foreign reserves fell by $366 million to $9.72 billion.

The SBP reported that total liquid foreign reserves were $15,771.4 million as of May 27.

The decline was caused by “external debt payments,” according to the central bank.

The news comes as Pakistan has yet to negotiate a staff-level agreement with the International Monetary Fund (IMF), although the administration is optimistic that a deal will be reached this month.

The government’s ability to make budgetary adjustments of around 2.5 percent of GDP, or Rs2,000 billion, by raising income and decreasing spending in the forthcoming budget 2022-23 is critical to the restoration of Pakistan’s delayed IMF program.

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The IMF’s wish-list or demands do not stop there, as the government must end petrol subsidies of Rs39 per liter and diesel subsidies of Rs53 per liter, raise electricity tariffs by Rs8 per unit through an increase in base tariff and fuel price adjustments, and raise gas tariffs by 20% on average to demonstrate its commitment to implementing the much-needed reforms agenda’ under the IMF program.

Finance Minister Miftah Ismail, on the other hand, told The News that the staff-level agreement with the Fund was scheduled to be signed by mid-June 2022.

Chinese banks agree to refinance Pakistan

Earlier in the day, the finance minister announced that Chinese banks had agreed to refinance Pakistan with $2.3 billion in funds to “bolster Pakistan’s foreign exchange reserves.”

Miftah commented on his Twitter account: “There is good news. The terms and circumstances for Chinese banks refinancing an RMB 15 billion deposit (about $2.3 billion) have been agreed upon.”

Good News: The terms and conditions for refinancing of RMB 15 billion deposit by Chinese banks (about US$ 2.3 billion) have been agreed. Inflow is expected shortly after some routine approvals from both sides. This will help shore up our foreign exchange reserves.

— Miftah Ismail (@MiftahIsmail) June 2, 2022

The finance minister went on to say that the influx is expected “shortly” after some regular approvals from both sides, which will assist shore up the country’s foreign exchange reserves.

Saudi Finance Minister Mohammed al-Jadaan told Reuters last month that the Kingdom was finalizing the expansion of the Kingdom’s $3 billion deposit to Pakistan.

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