Foreign exchange reserves held by the State Bank of Pakistan (SBP) fell by $366 million between May 20 and May 27 to $9.72 billion, the central bank said on Thursday. remaining level at less than a month and a half of imports. cover.
This is the lowest level since December 6, 2019. In the week ending May 20, the level had declined by $75 million to $10.09 billion.
Meanwhile, liquid foreign exchange reserves held by the country stood at $15.77 billion as of May 27, the SBP said in a note. Reserves held by commercial banks reached $6.05 billion.
SBP reserves fall another $75 million and now stand at $10.09 billion
“During the week, SBP reserves decreased by $366 million to $9,722.9 million due to repayment of external debt,” the central bank said.
Reserves held by the SBP have been on a downward trend as Pakistan desperately seeks to revive the International Monetary Fund (IMF) program, hoping it will pave the way for lending from other sources as well.
Miftah says $2.3 billion refinance deal reached with Chinese banks
During the day, Finance Minister Miftah Ismail announced that the government had reached a refinancing deal worth $2.3 billion with Chinese banks, a move that would ease pressure on the external front and shore up the country’s dwindling foreign exchange reserves.
In a tweet, he said that “terms and conditions for the refinancing of a 15 billion RMB deposit by Chinese banks (approximately $2.3 billion) have been agreed.”
“The inflow is expected shortly after some routine approvals from both sides. This will help shore up our foreign exchange reserves,” the finance minister said.
His tweet came after Moody’s Investors Service (Moody’s) downgraded Pakistan’s outlook from stable to negative. It affirmed the Pakistani government’s B3 local and foreign currency issuer rating and senior unsecured debt rating.
Moody’s downgrades Pakistan’s outlook to negative from stable
“The decision to change the outlook to negative is driven by Pakistan’s heightened external vulnerability risk and uncertainty over the sovereign’s ability to secure additional external financing to meet its needs,” the statement read.
The rating agency said Pakistan’s external vulnerability risk has been amplified by rising inflation, which is putting downward pressure on the current account, currency and – already slim – foreign exchange reserves, particularly in the context of heightened political and social risk.
Last week, the IMF mission concluded its talks with the Pakistani authorities without a word on reviving the Extended Financing Facility (EFF).
In its statement, the IMF mission said that deviations from policies agreed at the last review, partly reflecting the fuel and electricity subsidies announced by the authorities in February, urgently require concrete policy actions. , including through the removal of fuel and energy subsidies and the fiscal year 2023 budget, to achieve program objectives.
“The mission had very constructive discussions with the Pakistani authorities aimed at reaching an agreement on policies and reforms that would lead to the conclusion of the ongoing seventh review of the authorities’ reform program, which is supported by an agreement of the IMF on the EFF,” the IMF said in its statement after the talks.