KARACHI: The central bank has said Pakistan would continue to make timely loan payments, while inflows were expected to increase significantly in the second half of the current fiscal year.
“Along with the rollover of some external obligations, Pakistan’s foreign exchange reserves are expected to increase significantly in the coming months,” governor SBP Jameel Ahmad said in a podcast.
Earlier the central bank had repaid two commercial loans totalling $1.2 billion. These banks were expected to refinance the same amount, in coming days, helping to raise the country’s foreign reserves, he said.
“The government is also in talks with a friendly country for the disbursement of a $3 billion loan and negotiations with multilateral agencies are progressing, for further financial support,” he added.
The debt profile of Pakistan is composed of bilateral and multilateral creditors and only a small percentage is owed to foreign banks. SBP has enough reserves to repay all obligations in an effective manner, Ahmad reminded.
For the fiscal year 2023, around $33 billion have to be repaid to external stakeholders, including the current account deficit (CAD) of $10 billion and $23 billion in loan repayments. Out of the payable $23 billion external debt, Pakistan has already repaid more than $6 billion, according to the SBP’s governor.
Besides this, a bilateral loan of $4 billion has been rolled over with the cooperation of relevant countries. Another $8.3 billion maturing obligations were expected to be rolled over as discussions were underway.
The remaining outstanding repayment stands around $4.7 billion for the remainder of this fiscal year. This includes $1.1 billion in commercial loans that have to be paid to foreign banks and $3.6 billion in multilateral loans. Pakistan has received foreign exchange inflows of $4 billion (excluding the rollovers of $4 billion mentioned above).
At the beginning of the fiscal year, SBP projected CAD to be $10 billion for FY23. However, as Pakistan was hit by historic floods, this led to expectations of some increase in imports particularly that of wheat, fertilisers and cotton.
“Along with this, our exportable crops were impacted due to floods. As a result of this, it was expected that Pakistan’s CAD will increase by $2 to $3 billion,” Ahmad said.
In the international market, however, some important developments have taken place including a decrease in the price of petroleum products. SBP has also taken policy actions that will reduce some outflows significantly. As a result of these policy interventions and other measures, it is expected that CAD will remain below $10 billion for FY23.
In the last quarter of FY22, SBP and the government implemented some administrative measures to rationalise imports and improve the external accounts position. SBP placed restrictions on imports mentioned in chapters 84, 85 and certain items of 87.
These restrictions covered about 15 percent of Pakistan’s total imports whereas no restrictions have been placed on 85 percent of the imports. Thereafter, SBP in coordination with the government identified 8 to 10 business sectors which were genuinely affected and needed relief. They were allowed to import 50 percent to 60 percent of their monthly average import payments made during January to June, 2022.
Ahmad said similarly, some importers reported cases of demurrages where LCs for imports were opened before the issuance of SBP restrictions. SBP in coordination with commercial banks resolved the issue and the backlog of payments was cleared. Further, some relaxations were also given after consultation with industry. Consequently, less than 10 percent of the country’s imports are currently subject to administrative controls. All such restrictions are temporary and would be withdrawn gradually.
“Petroleum and pharmaceuticals are among the priority sectors for SBP. There are absolutely no restrictions on the import of petroleum products, or on the import of raw material or inputs related to the pharmaceutical sector,” Ahmad said.
“We recognise that administrative measures on imports must not be continued and we need to relax them gradually. From next year, we may review them and bring more ease to the businesses,” he added.
KARACHI: The Karachi Chamber of Commerce and Industry would remain open for membership renewal till 5:00pm on Friday,...
KARACHI: Department of Explosives, Ministry of Energy has warned Pakistan State Oil to refrain from constructing,...
KARACHI: Pakistan Hosiery Manufacturers and Exporters Association has dispelled the claim that the Federal Board of...
KARACHI: Gold prices in the local market increased by Rs100/tola on Thursday following an increase in the...
LAHORE: Pakistan Readymade Garments Manufacturers and Exporters Association on Thursday termed the Federal Board of...
LAHORE: Reforms in India delivered after Indian Diaspora found them transparent and started investing there. The...