China's $500mn boosts SBP's FX reserves, IMF agreement still elusive

March 09, 2023 (MLN): The foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $486.9 million or 12.76% WoW to $4.3 billion during the week ended on March 03, 2023, marking the fourth consecutive increase on weekly basis, according to the data released by the central bank on Thursday.

The significant surge in SBP's reserves is attributed to the commercial loan disbursement from China wherein SBP received $500 million from China Development Bank.

“During the week ended on 03-Mar-2023, SBP’s reserves increased by US$ 487 million to US$ 4,301.0 million, due to receipt of US$ 500 million as GoP commercial loan from China,” the statement issued by the central bank read.

Similarly, the country's total reserves rose by $486.1mn or 5.24% WoW to $9.75bn.

On the other hand, the reserves held by commercial banks remained flat at $5.45bn.

Cash strapped economy has been seeking loans from various sources including IMF to shore up its foreign exchange reserves and stabilize its economy.

The plummeting reserves along with delayed much-needed inflows from IMF have been putting significant pressure on local currency as well in the past weeks.

Though the government had complied with almost all the conditions, it is unable to get a clean chit from the fund.

In FYTD, PKR lost 77.45 rupees or 27.44%, while it plummeted by 55.86 rupees or 19.79% against the USD in CYTD. On the other hand, within the last seven sessions, the local unit moved up by 0.99%, as per data compiled by Mettis Global.

Federal Minister for Finance, Senator Ishaq Dar, clarified on Thursday that the staff-level agreement (SLA) with the IMF is unlikely to be finalized this week.

The finance minister also noted that the IMF was "satisfied" with the actions taken by Pakistan thus far, but declined to provide a specific timeline for the SLA's completion.

This news came as a disappointment to many who were hoping for a swift resolution to Pakistan's ongoing economic challenges.

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