Pakistan to pay $1.3bn loan by January 10, reserves to drop below $5bn

January 02, 2023 (MLN): New year has brought another challenge for cash-strapped Pakistan as the country will have to repay $1.3 billion in foreign loans by January 10, 2023, which will further deplete the foreign exchange reserves.

At present, the foreign exchange reserves held by the State Bank of Pakistan (SBP) stood at $5.8 billion, the lowest since April 2014.

After the loan payment, the reserves would go below $5bn if no major dollar injection is secured from any creditor.

"There is a due loan repayment of commercial loans to the tune of $1bn to Dubai-based commercial banks. Now it has come to the surface that there is another loan repayment of $300 million due on account of a sovereign loan extended by Islamabad to the Chinese side for the execution of an important project," Official sources confirmed to The News on Friday.

In totality, the due loan repayments in the first ten days of January 2023 stand at $1.3bn, the sources revealed.

Given this situation, Pakistan direly needs major dollar inflows to run its operations. However, on the other hand, the IMF review is in delaying mode and experts are of the view that there is a risk that Fund might end the program.

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