KARACHI: The State Bank of Pakistan (SBP) foreign exchange reserves recorded a notable increase of $ 1.3 billion during the two-week period supported by the arrival of the government of Pakistan official inflows from international financial institutions.

The SBP’s foreign exchange reserves witnessed an upward momentum during the last two weeks of December. Inflows worth $ 852 million were received during the week ended Dec 22, 2023, while inflows amounted to $ 464 million were arrived by Dec 29, 2023. Cumulatively, an amount of $ 1.316 billion landed in the SBP’s account during two weeks.

Sources said these inflows were received from the World Bank, Asian Development Bank and other financial institutions. Analysts said that due to multilateral dollar inflows after IMF staff approval, Pakistan FX reserves reached 23 weeks high.

With the arrival of these inflows, the SBP’s foreign exchange reserves crossed the $ 8 billion mark and reached $ 8.221 billion level as of Dec 29, 2023 up from $ 6.905 billion as of Dec 15, 2023.

In November 2023, IMF staff and the Pakistani authorities have also reached a staff-level agreement on the first review under Stand-By Arrangement (SBA) programme, subject to approval by the IMF’s Executive Board, which is scheduled to meet on Jan 11, 2024 to grant the final approval for the release of second tranche under SBA.

Upon the IMF’s Executive Board approval, Pakistan will get an amount of SDR 528 million or around $700 million. With the arrival of inflows from the IFM on account of SBA, the SBP’ and the country’s foreign exchange reserves will further strengthen.

According to the SBP’s statistics the total liquid foreign exchange reserves held by the country surged to $ 13.221 billion as of Dec 29, 2023 compared to $ 12.068 billion as of Dec 15, 2023, depicting an increase of $1.15 billion in the two weeks.

During the period under review, net foreign reserves held by commercial banks fell by $ 164 million to reach below $ 5 billion mark. Commercial Bank’s reserves dropped by $65 million during the previous week and some $ 99 million during the last week. According to SBP, net foreign reserves held by commercial banks declined to $ 4.99 billion as of Dec 29, 2023 compared to $ 5.164 billion as of Dec 15, 2023.

Analysts said the sufficient increase in the country’s reserves is a good sign for the country’s ailing economy and it will reduce the pressure on the external account.

Copyright Business Recorder, 2024