Inflows from AIIB, friends to help shore up foreign reserves: Dar

KARACHI: Finance Minister Ishaq Dar Wednesday voiced optimism that fresh funding from the Asian Infrastructure Investment Bank (AIIB) and expected inflows from friendly countries and other international financial institutions will help improve the country’s foreign reserves.

He made these remarks during a meeting with Governor State Bank of Pakistan Jameel Ahmad at the Governor House here.

Dar discussed various measures taken by the government to stabilise the economy and hoped that the results of these measures will soon reflect in an enhanced economic activity. He appreciated the timely provision of $500 million transferred by AIIB to Pakistan.

This financing will contribute towards maintaining the external account stability, Dar said.

The market has responded positively to the inflow of AIIB loan and further inflows in the pipeline from international financial institutions and friendly countries will boost the foreign exchange reserves, he added.

The latest inflows from the multilateral lender have helped the rupee to stabilise at 223.95 per dollar level.

However, the country’s foreign exchange reserves remained under pressure. Investors continue to worry about the falling reserves position and are skeptic about the country’s ability to meet its external financing requirements, including debt repayment. Pakistan has a $1 billion international bond repayment due on Friday. Its total foreign reserves with the central bank stood at $7.9 billion as of November 18.

During the meeting, the SBP’s governor commended the efforts of the present government for bringing efficiency, stability, and growth to the economy of Pakistan. He highlighted that the SBP was fully committed to supporting the process of economic revival as per the policies of the present government.

Last week, the SBP raised its key policy rate by 100 basis points to 16 percent in an effort to curb soaring inflation.

In its monetary policy statement, the SBP said it wanted to ensure that elevated inflation did not become entrenched and that risks to financial stability were contained, thus paving the way for higher growth on a more sustainable basis.

Analysts expressed great concerns over the SBP’s post-policy briefing on Friday on the decline in remittances and delay in expected support from friendly nations and other funding.

In response to these worries, the governor of SBP stated that he expected the forex reserves to be higher at the end of FY2023 than they were at the moment given the solid pipeline of inflows versus external payment commitments.