Forex Reserves Witness a Massive Decline Due to Debt Repayment

Pakistan’s foreign exchange reserves showed a significant decrease of $778 million (3.30 percent) for the week ending April 30, 2021, data released by the State Bank of Pakistan (SBP) showed on Thursday.

This is being attributed to the foreign loan repayments according to the central bank. A commercial loan of $1 billion was paid by the government that brought upon this impact. The total effect was partially offset by the inflows to be less than a billion.

During the week in concern, the total liquid foreign reserves held by the country fell to $22.742 billion from $23.52 billion a week before. The reserves held by the central bank decreased by $830 million to $15.597 billion.

However, the total reserves held by banks other than the SBP increased to $7.144 billion, from $7.092 billion a week before.

Inflows of foreign exchange through Roshan Digital Accounts (RDAs) crossed $1 billion recently, since its launch in September. These inflows and remittances are expected to reduce the impact of the total outflow expected as debt repayments.

The rollover facility provided by the United Arab Emirates and now Japan also helped in stabilizing the forex reserves. Pakistan also received proceeds of $2.5 billion against the issuance of Eurobonds.

In March 2021, Pakistan received nearly $500 million from the International Monetary Fund after the resumption of the loan program. As a result, for now, the current account is in a stable position with a surplus of $959 million in the July-March period.

Source: Pro Pakistani