KARACHI: The State Bank of Pakistan (SBP) received $1 billion from the UAE on Thursday following an agreement with the Abu Dhabi Fund for Development (ADFD) in Abu Dhabi on Jan 22.

The ADFD has agreed to provide $3bn to Pakistan in three instalments to help bridge the country’s current account deficit.

“The SBP has received $1bn from UAE today,” said Chief Spokesman SBP Abid Qamar.

Prior to this, Pakistan had approached China and Saudi Arabia for funds to avoid a balance of payments crisis. The country’s current account deficit rose to $7.9bn in the first half of the current fiscal year and is likely to reach $16-18bn by June 30.

Finance Minister Asad Umar, while presenting the mini-budget in the parliament on Wednesday, remarked that the government may also enter into an International Monetary Fund led programme. However, he also said that the government is not in a hurry as it is considering other options including bilateral support.

The government signed a similar deal of $3bn with Saudi Arabia earlier and the kingdom has so far placed $2bn in the SBP account whereas the last tranche of $1bn is expected in February. Saudi Arabia also agreed to supply oil worth $3bn on deferred payments.

Moreover, according to media reports following prime minister’s visit to Doha earlier this week, the government has also requested Qatar to supply LNG to Pakistan on a deferred payment mode. However, no official announcement was issued by the government. Pakistan’s annual LNG imports during the last fiscal year clocked in at $2.035bn.

Funds from Saudi Arabia and the UAE have had no impact on the exchange rate; however, a slight change was observed in the open-market following SBP’s agreement with the UAE. “The fluctuation of 20-30 paisa does not matter but the situation has improved and will improve with more inflows from the UAE,” said President Forex Association of Pakistan Malik Bostan.

On the other hand, inward remittances during first half of the ongoing fiscal year recorded 12pc growth and are likely to increase further once Qatar agrees to provide employment opportunities to 100,000 Pakistani labourers.

Reserves decline by $265m

According to the data released by the central bank, SBP’s foreign exchange reserves during the week ending Jan 18 fell by $265 million to $6.36bn.

Holdings of commercial banks jumped by $33m to $6.621bn while the country’s total liquid reserves stood at $13.257bn during the period under review.

The first tranche of $1bn of the promised $3bn from the UAE was received on Thursday, accounting for which the SBP reserves should stand at $7.36bn and total reserves at $14.257bn.

Published in Dawn, January 25th, 2019