ISLAMABAD: The foreign exchange reserves held by the central bank hit a record low to $4.5 billion on Saturday after Pakistan recently made repayments of over $1 billion loans to two foreign commercial banks. The reserves of $4.5 billion are hardly enough to finance 25 days of import.
Two separate repayments of $600 million and $415 million have been made to two Dubai-based commercial banks, sources said on Saturday. After the loans repayments, Pakistan is left with less than 25 days of import cover.
It is pertinent to mention here that the economic activities in the country have already been severely affected due to depleting reserves, devaluation of local currency and non-opening of Letters of Credit (LCs) for private companies.
Major industries including car manufacturing companies have temporarily closed their plants due to import restrictions. However, efforts are on to help the country regain the lost reserves.
Well-placed sources said that Pakistan is expecting to raise around $1.5 to $2 billion worth of funds in foreign aid during Geneva Conference to be held next week for the country’s flood victims.
Besides, efforts are also underway to arrange loans from Saudi Arabia and China as army chief Gen Asim Munir is on a weeklong trip to the Kingdom of Saudi Arabia and United Arab Emirates (UAE) to shore up assistance from the decades-old friendly countries.
It is expected that Pakistan and International Monetary Fund (IMF) will hold discussion next week for the completion of the pending 9th review of the programme.
If the pending review is completed successfully, Pakistan will get a loan instalment of over $1 billion from the IMF.
Prime Minister Shehbaz Sharif has also requested the IMF Managing Director to immediately send over a team to the country to start review negotiations for the next tranche of its loan.
While speaking at the inauguration of Hazara Electric Supply Company (HAZECO) in Islamabad on Friday, the premier also confirmed that he had a telephonic conversation with IMF Managing Director Kristalina Georgieva on Thursday.
“I asked her to send an IMF team for the completion of the pending 9th review of the programme so that the next loan tranche is released,” Shehbaz Sharif told the gathering while referring to his telephonic conversation with Georgieva a day earlier. “She assured that the mission will visit [Pakistan] in the next two to three days”.
However, the finance ministry sources said no dates for the IMF review mission had been finalised yet.
Finance Minister Ishaq Dar would leave for Geneva along with PM Shehbaz and meet IMF officials on the sidelines of a conference there. The conference has now been lowered to a climate resilience event from a donors’ conference because of lack of interest by major players.
The premier’s direct intervention in the IMF programme talks suggests that the matters have slipped out of the hands of the finance ministry.
The 9th review talks have been pending since October last year, resulting in the withholding of a $1.1 billion loan tranche. Pakistan is keen to complete the 9th review so that the World Bank and Asian Infrastructure Investment Bank (AIIB) may also release their loans.