Miftah Ismail confirms that the SBP has received $2.3 billion from Chinese banks. Finance Minister Miftah Ismail announced on Friday that an RMB 15 billion (approximately $2.3 billion) Chinese consortium loan has been credited to the State Bank of Pakistan’s (SBP) account, increasing Pakistan’s foreign exchange reserves.
Previously, Pakistan signed a loan facility agreement with a Chinese consortium of banks to help with depleting foreign exchange reserves and currency depreciation. “We thank the Chinese government for facilitating this transaction,” the finance minister tweeted after the agreement was signed.
The agreement with Chinese banks is expected to boost the country’s reserves and allow it to make import payments, while also lending some support to the rupee, which has lost more than 34% since the start of the current fiscal year 2021-22.
The development came as a huge relief to economic policymakers after the SBP’s foreign exchange reserves fell below $9 billion on June 10, remaining at less than six weeks of import cover. Pakistan’s foreign reserves continue to dwindle. The central bank reported on Thursday that Pakistan’s total liquid foreign exchange reserves were $14,210.4 million, down from $14,943 million the previous week.
Total liquid foreign exchange reserves have dropped to their lowest level since January 18, 2019. According to the breakdown, the SBP’s foreign reserves total $8,237.7 million. The SBP stated that the decline in foreign reserves of $748 million in the previous week was due to external debt repayments.
The SBP reserves are at their lowest since October 25, 2019, implying that Pakistan has only 1.21 months of import cover. Meanwhile, commercial banks’ net foreign reserves stood at $5,972.7 million.