SBP held reserves reach $4.3 after $487 from ICBC

Pakistan's total reserves at $9.75 billion after adding $5.45 billion net reserves of commercial banks

The State Bank of Pakistan’s (SBP) foreign exchange reserves climbed by $487 million as a result of another loan from China, reaching $4.3 billion as of March 3, data released on Thursday has showed. The central bank-held reserves have now increased for the fourth weeks in a row.

The country’s total liquid foreign reserves were $9.75 billion. The total amount of net foreign reserves held by commercial banks are $5.45 billion. The SBP reported that the week of March 3, 2023 saw an increase in reserves of $487 million to $4.3 billion as a result of receiving a $500 million commercial loan from China for the Government of Pakistan (GoP).

ICBC (Industrial and Commercial Bank of China) provided $500 million. Last week Finance Minister Ishaq Dar had said that a new $500 million tranche would be provided shortly. Dar had stated that all formalities had been completed and that ICBC had approved the rollover of a combined $1.3 billion facility that Pakistan had just repaid.

Due to a commercial loan from the China Development Bank, the SBP’s foreign exchange reserves last week grew by $556 million to $3.81 billion.

The urgent necessity for Pakistan to finish the next assessment of the International Monetary Fund (IMF) programme is highlighted by central bank reserves which were approximately $18 billion at the beginning of 2022 but have experienced severe depletion in recent months.

The rupee suffered a loss of Rs3.18 or 1.13% to close at 282.3 in the inter-bank market on Thursday as a result of the delay in reaching an agreement with the IMF.

The economy, which is heavily dependent on imports to power its engines, is under pressure due to a shortage of foreign currency reserves. While some restrictions on inbound shipments have been implemented by the SBP, which has helped to reduce the current account deficit, many enterprises have been forced to close or scale back operations as officials work to secure dollar inflow.