Business

Debt payments dent SBP-held foreign exchange reserves

Published

2 years ago

Farwa

SBP’s forex reserves decrease by $36 million to $4.2 billion.
Reserves enough for less than a month’s worth of imports.
IMF funding is critical for Pakistan to shore up its reserves.

The State Bank of Pakistan (SBP)-held foreign exchange reserves fell further as the cash-strapped nation met its debt obligations to avoid a possible default, with the financing avenues contracting amid a stalled International Monetary Fund (IMF) programme.

In its weekly bulletin, the SBP said that its foreign exchange reserves have decreased by $36 million to $4.2 billion as of the week ended March 31, which will provide an import cover of less than a month.

The net forex reserves held by commercial banks stand at $5.51 billion, $1.3 billion more than the SBP, bringing the total liquid foreign exchange reserves of the country to $9.75 billion, the statement mentioned.

Pakistan’s $350 billion economy continues to dwindle amid financial woes and the authorities struggle to strike a staff-level agreement with the IMF.

The Washington-based lender has been in talks with the Pakistani authorities since end-January to resume the $1.1 billion loan tranche held since November, part of a $6.5 billion Extended Fund Facility (EFF) agreed upon in 2019.

The IMF funding is critical for Pakistan to unlock other external financing avenues to avert a default on its obligations.

The IMF has asked Pakistan to secure assurances on external financing from friendly countries and multilateral partners to fund its balance of payment gap for this fiscal year, which ends in June.

In this regard, Saudi Arabia has assured the Washington-based lender that it would provide $2 billion in additional deposits to Pakistan, according to a report published in The News.

The assurance from Saudi Arabia helped the Pakistan rupee recover from a historic low and boosted investors’ confidence in the stock market, sending it above the 40,000 points mark.

Minister for Finance and Revenue Ishaq Dar also held a meeting with US Ambassador to Pakistan Donald Blome, which, according to sources, has assured America’s support for Pakistan to unlock the stalled IMF programme.

However, World Bank and Asian Development have projected Pakistan’s GDP to fall below 1% in the ongoing fiscal year, while warning that the non-completion of the IMF programme, failure to secure financing from key bilateral partners and political instability may result in an eruption of a major macroeconomic crisis.

Business

E&P Companies Will Invest $5 Billion in Pakistan’s Petroleum Industry

Published

8 hours ago

Farwa

Over the next three years, local and foreign companies involved in Pakistan’s oil and gas exploration and production sector have shown a strong desire to invest more than $5 billion in the nation’s energy sector.

Recent changes to the Petroleum Policy and the implementation of an exclusive tight gas policy, which provide better incentives and a more investor-friendly regulatory framework, are credited with the increase in investor confidence.

These strategic changes are expected to boost domestic energy production, open up new avenues for growth, and draw large amounts of both domestic and foreign investment.

Business

With inflation slowing, the SBP is anticipated to lower the policy rate for the eighth time in a row.

Published

9 hours ago

Farwa

Businesspeople anticipate another reduction in the policy rate when the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) releases the updated rate.

The interest rate for the upcoming two months will be announced by the central bank. It is still unclear if the rate will stay the same or be lowered to reflect stakeholder expectations.

According to experts, the policy rate will be lowered in order to further boost the nation’s economic sector.

Interest rates may be lowered for the seventh time in a row if the inflation rate declines significantly more than anticipated.

In its last six sessions, the MPC had cut the policy rate by 10 percent. In January 2025, it decreased the rate by one percent to 12pc.

12PC POLICY RATE

In January, the State Bank of Pakistan (SBP) announced cut in key policy rate by 100 basis points (bps) to 12 percent from 13pc in line with expectations of the business community.

The policy rate, which had been at 22 percent since June 2024, was slashed by 1,000 basis points to 12 percent.

The SBP governor said the decision was taken with careful consideration. “Although inflation is expected to decline next month (February), core inflation remains a pressing concern,” he stated.

Ahmed highlighted strong remittance inflows and robust export growth as key factors supporting the current account.