SBP’s foreign exchange reserves rise above $3bn         

KARACHI: After having maintained a declining trend in the last three weeks, the State Bank of Pakistan’s (SBP) foreign exchange reserves witnessed an increase of $276 million to $3.193 billion, ARY News reported on Thursday, citing the central bank.

According to a statement issued by the central bank, the foreign exchange reserves held by the SBP were recorded at $3,192.9 million as of February 10, up $276 million compared with $2,916.7 on February 3.

Total liquid foreign #reserves held by the country stood at US$ 8.70 billion as of February 10, 2023.
For details https://t.co/WpSgomnd3v pic.twitter.com/Bg7WJUryJy

— SBP (@StateBank_Pak) February 16, 2023

Meanwhile, the net foreign reserves held by commercial banks stood at $5.5 billion, bringing the country’s total liquid foreign reserves to $8.7 billion. However, the central bank did not mention any specific reason behind an increase in SBP-held reserves.

Last week, the country’s foreign exchange reserves had fallen below Rs3bn on account of external debt payments.

Pakistan was eyeing to reach an agreement with the International Monetary Fund (IMF) that would not only lead to a disbursement of $1.2bn but also unlock inflows from friendly countries.

The International Monetary Fund (IMF) and Pakistan moved closer to the revival of $7 billion Extended Fund Facility (EFF) as the lender responded to the Memorandum of Economic and Financial Policies (MEFP) draft.

According to details, the Fund has responded to the Memorandum of Economic and Financial Policies (MEFP) draft – sent by officials of Ministry of Finance and Revenue.

Sources told ARY News that IMF and finance ministry held virtual talks today, adding that the ninth review to the revival of $7 billion Extended Fund Facility (EFF) will be completed soon.

Moreover, Global rating agency Fitch downgraded Pakistan’s long-term foreign currency issuer default rating (IDR) to ‘CCC-’ from ‘CCC+’.

In a statement, the agency said the downgrade reflects further sharp deterioration in external liquidity and funding conditions, and the decline of foreign-exchange (FX) reserves to critically low levels.

“While we assume a successful conclusion of the 9th review of Pakistan’s IMF (International Monetary Fund) programme, the downgrade also reflects large risks to continued programme performance and funding, including in the run-up to this year’s elections. Default or debt restructuring is an increasingly real possibility, in our view,” it added.

Finance Bill

Earlier in the day, Federal Minister for Finance and Revenue Senator Ishaq Dar introduced the Finance (Supplementary) Bill 2023 or the “mini-budget” in the National Assembly as the coalition government rushes to fulfil the conditions of the International Monetary Fund (IMF) to secure loan programme needed to avoid a default.

Addressing the lower house of parliament, the finance minister announced to increase General Sales Tax GST rate from 17 to 18% and increasing the Federal Excise Duty (FED) on cigarettes.