KARACHI: The State Bank of Pakistan’s (SBP) foreign exchange reserves have remained around $9 billion since the IMF’s $1.1 billion arrival in April, reflecting no other inflows.

The central bank reported on Thursday that its reserves increased by a meagre $16 million to $9.109bn during the week ended May 31 without mentioning the source of this inflow.

However, the reserves of the commercial banks fell by $116m to $5.1bn during the week, bringing the country’s total down by $100m to $14.2bn.

Alarmingly, sources in the financial circle revealed that Pakistan is facing a daunting challenge. The country is expected to pay up to $10bn in debt servicing till July 31, which is more than the SBP’s overall forex holding.

This dire situation underscores the country’s urgent need for immediate assistance to bolster its reserves.

Earlier, there were widespread reports in the media about a potential loan package from the IMF in July. While sources have indicated the possibility, it’s important to note that the amount required is significantly larger than the current reserves, which could pose a challenge for the country.

However, it was also observed that the financial experts were hopeful for yet another rollover of Chinese loans. Pakistan owes about $26bn to China. The prime minister, finance minister and foreign minister are in China just before the budget. Speculations about the rollover of loans were stronger due to the visit.

Published in Dawn, June 7th, 2024