Pakistan’s forex reserves dropped for the second straight week by $260 million (-1.11 percent) on a week-on-week basis to stand at $23.23 billion.
According to data released by the State Bank of Pakistan (SBP) on Thursday, the foreign exchange reserves during the week ended on February 18, 2022 reached $23.23 billion from $23.49 billion. During the last 11 weeks, foreign exchange reserves have dropped for ten weeks.
The SBP data revealed that reserves held by the central bank during the week declined 1.69 percent on a weekly basis, as the foreign currency reserves held by the SBP were recorded at $16,806.5 million, down $289 million compared with $17,095.8 million on February 11. The central bank gave no reason for the decrease in reserves.
However, the reserves of commercial banks inched up to $6.42 billion from $6.39 billion in the previous week.
The International Monetary Fund’s (IMF) Executive Board on February 2 approved Pakistan’s request for an $1 billion loan tranche. A meeting of the IMF’s Executive Board took place to discuss and finalise Pakistan’s request for the completion of the sixth Review and release of a $1 billion tranche under the Extended Fund Facility (EFF).
The foreign exchange reserves held by the central bank soared to an all-time high of $20.15 billion after Pakistan received a general allocation of Special Drawing Rights (SDRs) worth $2,751.8 million from the International Monetary Fund (IMF) on August 24.
Pakistan has been looking to build its foreign currency reserves on the back of loans, remittances, and higher exports. However, foreign direct investment continues to be an area of concern for policymakers.
The reserves level is also critical for Pakistan to build an import cover with the bill crossing $5 billion each month, putting pressure on the currency that fell to its weakest level against the US dollar this month.
The government borrowed $10.4 billion in the past six months, which was higher by 78 percent over the same period of last year, as it struggled to address the growing current account imbalance and keep the debt-financed foreign exchange reserves at current levels.
Gross foreign loan disbursements during July-December of current fiscal year remained at $9.3 billion, the Ministry of Economic Affairs reported a day earlier. In addition to this, the government received $1.1 billion in foreign loans from the overseas Pakistanis through the Naya Pakistan Certificates, the central bank data showed.
The cumulative gross foreign loans secured in the first half of the current fiscal year were higher by $4.5 billion, or 78 percent, from the same period of previous fiscal year, showed the official statistics.