Sigh of Relief: SBP receives $700mn from China

February 24, 2023 (MLN): In a major breakthrough, the State Bank of Pakistan (SBP) finally received $700 million from China on Friday, Federal Minister for Finance and Revenue Senator Ishaq Dar informed through his official Twitter handle. 

"Funds $ 700 million received today by State Bank of Pakistan from China Development Bank," he said.

AlhamdoLilah!

Funds $ 700 million received today by State Bank of Pakistan from China Development Bank. https://t.co/7eLwWkSFgO

— Ishaq Dar (@MIshaqDar50) February 24, 2023

On Wednesday, Ishaq Dar said that the loan has been approved by the Board of China Development Bank and all formalities have been completed.

"The loan is expected to be received by the SBP this week, which will help shore up the country’s foreign exchange reserves," he added. 

Pakistan has been seeking loans from various sources to shore up its foreign exchange reserves and stabilize its economy.

This loan from China is part of a series of financial assistance packages that the country has received from its close ally in recent years. With this loan, Pakistan will be able to boost its reserves and work towards economic stability in the long run.

On the IMF front, Secretary of Finance Mr. Hamed Yaqoob Sheikh revealed on Tuesday that the Staff Level Agreement (SLA) will be finalized within three working days. However, no major development has taken place yet. 

At present, the foreign exchange reserves held by the central bank stood at $3.25 billion, up by $65.6 million or 2.05% WoW during the week ended on February 17, 2023, marking the second consecutive increase on weekly basis, according to the data released by the central bank on Thursday.

The central bank is also expected to raise interest rates in an off-cycle review this week, as the country seeks to repair its finances and secure a loan from the fund.

These decisions, undoubtedly, were the most difficult decisions for the coalition government in the political landscape of Pakistan but much needed to close the deal with the fund.

On the forex front, The government's efforts to secure a deal with the International Monetary Fund (IMF) have resulted in a significant boost for the Pakistani rupee (PKR), which appreciated by 2.8 rupees against the US dollar during five consecutive sessions to settle the week at PKR 259.99 per USD compared to the previous week’s closing of PKR 262.82 per USD.

In FYTD, PKR lost 57.14 rupees or 21.21%, while it plummeted by 33.55 rupees or 12.91% against the USD in CYTD. On the other hand, within the last seven sessions, the local unit moved up by 1.09%, as per data compiled by Mettis Global.

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