Reserves fall further after repayment of $1.2 billion in loans to UAE banks, sources say
After repaying loans to banks in the United Arab Emirates (UAE) totaling $1.2 billion, the foreign exchange reserves held by the State Bank of Pakistan (SBP) have dwindled to just $4.5 billion, sources told Geo News on Saturday.
The development, sources said, left Pakistan with less than a month’s worth of imports as the country faces a worsening economic crisis while trying to cut imports amid a dollar shortage.
A breakdown shows that Pakistan returned $600 million to Emirates Bank, while it returned $420 million to Dubai Islamic Bank, sources said.
Sources said the coalition government will try to mobilize $1.5 billion in foreign funding at the upcoming International Conference on Climate Resilient Pakistan.
Prime Minister Shehbaz Sharif will travel to Geneva on Sunday. He will lead a high-level delegation of federal ministers and SAPMs to Switzerland, where he will co-host the conference — together with UN Secretary-General Antonio Guterres — on 9 January.
The conference aims to help the people and government of Pakistan recover more effectively from the recent devastating floods.
“Maybe our friendly countries are waiting for the donors’ conference so they can help us [and provide loans],” Planning and Development Minister Ahsan Iqbal told Geo News’ Shahzeb Khanzada last month.
During the week ending December 30, 2022, foreign exchange reserves held by the central bank fell by $245 million to $5.57 billion – the lowest level since April 2014 – from last week’s reserves of $5.821 billion .
Net foreign exchange reserves held by commercial banks stand at $5.84 billion, with total reserves at $11.42 billion.
The National Security Council (NSC) recently agreed to take concrete steps — including streamlining imports as well as preventing illicit currency outflows and hawala businesses — to boost the economy.
Amid a crisis-like situation, Pakistan will have to repay around $8.3 billion in the form of external debt service in the next three months (January-March) of the current fiscal year.
The government hopes to pass the International Monetary Fund’s (IMF) ninth review to secure a $1.7 billion rescue package, but both sides have made little progress in recent days.
In this regard, Finance Minister and Senator Ishaq Dar said that despite the difficult task, the country will fulfill its international obligations and not go bankrupt.
Dar also sees Saudi Arabia and China boosting their deposits in Pakistan “within days” and claimed that foreign exchange reserves will see a gradual rise during the current financial year.