ISLAMABAD: External dollars flowing into the country in the form of loans/grants from multilateral and bilateral creditors hit a huge bump in February, with Pakistan only able to bring in $154.4m, increasing pressure on foreign exchange reserves , according to data released on Friday.
Due to slowing dollar inflows, the country’s foreign exchange reserves held by the State Bank of Pakistan (SBP) saw a sharp decline of $869 million in just one week ending March 18, 2022.
Previously, foreign currency reserves were declining by $200-300 million per week, but the pace accelerated in mid-March 2022, mainly due to slowing dollar inflows and increased service requirements debt.
Although the current account deficit narrowed sharply from $2.3 billion in January 2022 to $545 million in February 2022 on the expectation that foreign exchange reserves would actually increase, it narrowed sharply according to latest data published by the SBP.
“This is a worrying indicator and if this trend continues in the coming weeks and months, the balance of payments crisis will be knocking on the door by the end of the current financial year,” an economist said. independent during an interview with The News.
With the 7th review under the IMF program still unfinished, it will be difficult for Pakistan to manage external financing needs amid persistently rising political temperatures.
Today, Pakistan has no choice but to seek increased commercial lending to shore up its dwindling foreign currency reserves.
Despite securing a generous financial package from Saudi Arabia in the form of term deposits of $3 billion and from China in the form of $4.2 billion in renewal loans, the total inflows of Pakistani dollars in eight months (July-February) amounted to 12.178 billion dollars during this period. tax. The country secured $7.2 billion in the same eight months of the previous fiscal year.
The country’s total foreign loans and grants stood at $12.022 billion through January 2022.
The pace of inflows dropped alarmingly in February 2022, while the country recouped a total of $12.178 billion in July-February of 2021-22.
Pakistan continued to depend on dollar inflows from bilateral/multilateral creditors, commercial loans, term deposits, international floating bonds, government guaranteed debt and term deposits from friendly countries. Islamabad received $203.6 million in the first eight months from China and the United States, which remained the largest bilateral donors in the current fiscal year.
China provided $100.8 million in loans and grants, France $8.08 million, Germany $12.36 million, Japan $12.94 million, Korea 4, $06 million, Oman $0.13 million, Saudi Arabia $1.09 million, UK $14.54 million and the United States granted $49.67 million.
Multilateral donors provided $3.477 billion during the reporting period, AfDB $1.1 billion, AIIB $38.87 million, EU $22 million, WB IBRD $172.45 million World Bank IDA $861.7 million, IDB $66.67 million, IDB (short term) $1.189 billion, IFAD $20.52 million. million, and the MDTF transferred $3.85 million to Pakistan.
The government launched two international bonds to raise $2.041 billion in the current fiscal year. It also secured $2.6 billion in commercial loans, with Ajman Bank providing $61 million, Dubai Bank $1.14 billion, Emirates NBP $591.25 million, Standard Chartered Bank London $482.26 million, while Switzerland, AGM UBL and ABL together loaned the country $343.5 million. . The country received $832.5 million through state-guaranteed loans in the first eight months of the current fiscal year.