Islamabad: Pakistan’s foreign exchange reserves rose to about a nine-month high after the South Asian nation secured a fresh financial bailout from the International Monetary Fund last week.
The kitty almost doubled to $8.73 billion as of July 14, from $4.52 billion in the previous week, the State Bank of Pakistan said Thursday, as inflows came from the multilateral lender as well as friendly nations, including Saudi Arabia and the UAE. That’s the highest since October when the central bank held $8.76 billion.
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Pakistan received assistance of about $4.2 billion last week. The nation is relying on the funds to keep its balance of payment position in check after exports dropped 13 per cent in the year ended June, while foreign direct investment plunged 25 per cent.
China’s Exim Bank also rolled over its $600 million commercial loan to Pakistan early this week, but that will reflect in next week’s reserves.
The fresh inflows, along with $5.34 billion held by local commercial banks, took Pakistan’s total foreign exchange reserves to $14.1 billion, the central bank said.
The pact with the Washington-based lender, under which it will provide $3 billion in three tranches, helped Pakistan avoid an imminent default. It also gives comfort to the government of Prime Minister Shehbaz Sharif, whose tenure is ending next month.
With Pakistan’s external debt swelling to $100 billion, the IMF has warned the nation’s debt can become unsustainable if it doesn’t hit bailout program goals. Risks to its debt sustainability have become more pronounced because of scarcity of international financing and large funding needs, it said in a latest report.