The foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by nearly $2 billion to over $10 billion following a Chinese consortium loan of RMB 15 billion. The central bank said in a statement; “SBP received proceeds of CDB loan amounting to RMB 15 billion and after accounting for external debt repayment, SBP’s reserves increased by US$ 2,071 million to US$ 10,309.0 million.”
CDB loan helped prop up foreign exchange reserves
The central bank received the CDB loan during the week that ended on June 24, 2022, which has led to the increase in the foreign exchange reserves after accounting for external debt repayment. The total liquid foreign reserves held by the country stood at $16,195.6 million as of June 24, 2022, against $14.21 billion as of June 17, 2022, depicting an increase of $1.98 billion in a week.
Meanwhile, the net foreign reserves held by commercial banks decreased by $86 million to $ 5.886 billion as of June 24, 2022 compared to $5.972 billion as of June 17, 2022. It is pertinent to mention here that Pakistan and China signed a loan deal of RMB 15 billion in order to increase the country’s declining foreign exchange reserves.
Pakistan’s current account deficit spikes
Pakistan’s current account deficit increases to a four-month high at $1.425 billion in May 2022 in the wake of a decline in remittances and exports. According to the State Bank of Pakistan, the current account deficit of the country has risen to $1.4 billion in May 2022 compared to a deficit of $640 million in the same month of last year. According to the central bank; “Decline in remittances and exports on account of Eid holidays contributed to this rise (to $1.425 billion in May).”