Pakistan’s forex reserves rise above $4 billion after fresh Chinese loan flows in

ISLAMABAD – The State Bank of Pakistan (SBP) announced on Thursday that its foreign exchange reserves have risen to over $4 billion.

The South Asian country has received a fresh loan of $500 million from a Chinese commercial bank. 

The forex reserves held by the SBP fell rapidly from $16.3 billion in February 2022 to a nine-year low of $2.92 billion on February 3, 2023. The dwindling reserves, barely enough to cover three weeks of imports, pushed the country to the brink of default. 

As Islamabad struggles to revive a stalled $1.1 billion IMF loan programme, it has desperately looked toward “friendly countries” to shore up its foreign reserves. 

As uncertainty looms around the IMF deal, Finance Minister Ishaq Dar said on Thursday that Pakistan is “very close” to signing the staff-level agreement with the global money lender.

“The total liquid foreign reserves held by the country stood at $ 9,754.0 million as of 03-Mar-2023,” the SBP said in a statement on Thursday.

“During the week ended on [March 3] 2023, [the] SBP’s reserves increased by $487 million to $ 4,301.0 million, due to receipt of $500 million as GoP commercial loan from China,” it added. 

Providing a breakup of the reserves, the central bank said foreign reserves currently held by the SBP stood at $ 4.3 billion, net foreign reserves held by commercial banks stood at $5.4 billion, while the total liquid foreign reserves of the country stood at $ 9.75 billion .

To prevent the outflow of dollars, Pakistan has imposed restrictions on imports, with the move prompting the partial closure of many industrial units and affecting exports, which provide a major source of revenue for the country.