The State Bank of Pakistan (SBP)-held foreign exchange reserves rose above the $4 billion mark after the cash-strapped nation received a $500 million loan from a Chinese bank.
The central bank, in its weekly bulletin, said that its foreign exchange reserves have increased by $487 million to $4,301 million as of the week ended March 3, which will provide an import cover of around a month. The SBP received $500 million last week from the Industrial and Commercial Bank of China (ICBC) as part of the institution’s $1.3 billion facility, just days after it had received $700 million from the China Development Bank. 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 trying to secure the IMF bailout to avert a debt default, unlock more funding and stave off severe supply shortages. There are $7 billion of repayments in the coming months, including a Chinese loan of $2 billion due in March, according to Fitch Ratings. The nation needs to repay about $3 billion dues in the upcoming payments while $4 billion is expected to be rolled over, SBP Governor Jameel Ahmad said in an analyst briefing after the announcement of the monetary policy rate – which has been jacked by to a 27-year high of 20%.
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.