SBP’s held foreign reserves surpass $4 billion

After the cash-strapped country received a $500 million loan from a Chinese bank, the State Bank of Pakistan’s (SBP) foreign exchange reserves surpassed the $4 billion mark. According to the central bank’s weekly bulletin, as of the week ending March 3, its foreign exchange reserves had grown by $487 million to $4,301 million, covering about a month’s worth of imports. Just days after receiving $700 million from the China Development Bank, the SBP received $500 million last week as part of the institution’s $1.3 billion facility from the Industrial and Commercial Bank of China (ICBC).

Pakistan hasn’t received funds from any friendly country except for China as the $350 billion economy struggles to revive the stalled International Monetary Fund (IMF) programme.

Cash-strapped Pakistan has been attempting to obtain the IMF bailout in order to avoid a default on its debt, gain access to additional funding, and avoid severe supply shortages. According to Fitch Ratings, there will be $7 billion in repayments in the upcoming months, including a $2 billion Chinese loan that is due in March. SBP Governor Jameel Ahmad stated in an analyst briefing following the announcement of the monetary policy rate — which has been increased by to a 27-year high of 20% — that the country needs to repay about $3 billion in debt in the upcoming payments while $4 billion is anticipated to be rolled over.

But as the IMF deal sees a dealy, the Pakistan rupee has plunged to historic lows and closed at 282.30 against the dollar in the interbank market — and if all goes well for Pakistan in the coming days, experts believe that the local currency can only recover to 265.