Governor SBP says foreign reserves to increase in second half

ISLAMABAD: State Bank of Pakistan (SBP) Governor Jameel Ahmad has asserted that all debt repayments were on track while the country’s foreign exchange reserves are expected to increase in second half of the current fiscal year.

In a statement, Governor SBP noted that for the fiscal year 2023, around $33 billion were 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 whereas as a bilateral loan of $4 billion has been rolled over with the cooperation of relevant countries.

“Another $8.3 billion maturing obligations are expected to be rolled over as discussions are underway,” he said, adding that the remaining outstanding repayment stands around $4.7 billion for the remainder of this fiscal year.

He said, Pakistan has received foreign exchange inflows of $4 billion (excluding the rollovers of $4 billion mentioned above). “Pakistan will continue to make timely loans payments while inflows are expected to increase significantly in the second half of the current fiscal year,” he added.

Along with the rollover of some external obligations, Pakistan’s foreign exchange reserves are expected to increase significantly in the coming months.

He said the debt profile of Pakistan was 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 and the inflows expected will boost forex reserves”.

He was of the view that globally, the war in Ukraine, a historic increase in the international commodity prices and monetary tightening pursued by central banks are major challenges.

As a result of this, developing countries, including Pakistan were facing difficulties in raising funds from international financial markets. On the domestic front, the economy is impacted by floods which created challenges for Pakistan.

Overall the situation is challenging; however, SBP and the government are taking measures to improve it, Governor SBP added.

It is pertinent to mention here that the foreign exchange reserves held by the State Bank of Pakistan (SBP) fell another $784 million to $6.715 billion as of December 2, 2022.

According to the data released by State Bank of Pakistan (SBP), the foreign reserves held by the central stood at $6,714.9 million. This is the lowest level of SBP-held reserves since January 2019.

Meanwhile, the net foreign reserves held by commercial banks were recorded at $5,866.8 million, whereas the total liquid foreign reserves held by the country stood at $12.582 billion.