Debt servicing: SBP-held forex reserves fall to $7.96b

KARACHI: Pakistan's central bank registered a reduction of $956 million in its foreign exchange reserves due to debt payments, which fell to $7.96 billion, a statement said Thursday.

In a statement, the State Bank of Pakistan (SBP) said the total liquid foreign reserves held by the country stood at $13.72 billion. Net foreign reserves held by commercial banks clocked in at $5.76 billion after a reduction of $2 million.

“During the week ended on November 4, 2022, SBP’s reserves decreased by $956 million to $7,957 million due to external debt servicing,” said SBP in a statement.

This leaves the country with an import cover for 1.16 months only.

“Major external debt repayments executed during the week include repayment of government’s commercial loans,” it said.

The SBP further said that refinancing of these loans was in process which would improve foreign exchange reserves in the coming weeks”.

The central bank-held foreign exchange reserves as of October 28, 2022, soared by nearly 20% — to a 15-week high — surpassing the crucial threshold of $8 billion.

The reserves are crucial for the country amid the current situation, where it has to also import edibles after the cataclysmic floods devastated the agricultural crops and dealt damages estimated at over $30 billion.

Earlier this week, Finance Minister Ishaq Dar announced the Asian Infrastructure Investment Bank (AIIB) would extend $500 million as co-financing for a development programme in Pakistan.

“These funds will be received by the State Bank of Pakistan within November 2022,” Dar tweeted, as the cash-strapped nation desperately seeks financing to cushion the impact of floods.

These funds would help boost forex reserves held by the central bank.

In October, The Asian Development Bank (ADB) also approved $1.5 billion in financing to help Pakistan provide social protection, promote food security, and support employment for its people amid devastating floods and global supply chain disruptions.