Foreign Exchange Reserves Drop Dangerously Low Following Debt Repayments

Pakistan’s foreign currency reserves have fallen dangerously low to $4.5 billion due to major debt repayments. As a result, Prime Minister Shehbaz Sharif has now requested that the International Monetary Fund (IMF) managing director immediately send a team to Pakistan to review the loan and begin negotiations for its next tranche. The Prime Minister spoke at the Islamabad inauguration of Hazara Electric Supply Company, (HAZECO). He also confirmed a telephonic conversation on Thursday with Kristalina Georgieva, IMF’s Managing Director. Here is what he said while addressing the gathering about his phone conversation. But sources have said that a time and date have still not been finalized for the IMF review. Since October last year, the 9th review talks had been in limbo. This resulted in the withholding of a $1.1 million loan tranche. Pakistan wants to finish the 9th review so the World Bank, Asian Infrastructure Investment Bank (AIIB), and other lenders may release their loans. PM Shehbaz revealed his conversation with IMF’s chief the day Pakistan repaid two additional foreign commercial loans valuing up to $1.02 billion. According to officials, Pakistan paid $600 million back to Emirates NBD Bank and $420 Million to Dubai Islamic Bank on Friday. The official foreign currency reserves have fallen to $4.5 billion after the new debt repayments. This is enough for just 25 days of import coverage. No major inflows were reported during the first week of 2023. On Thursday, the central bank reported that foreign reserves had fallen to $5.6 billion as of December 30, 2022. Pakistan expects a refinance of $700 Million from the Chinese Development Bank, and a $3 billion cash injection from Saudi Arabia. Dar stated that this would happen “in days”. Source: Express Tribune