According to the official data released by the State Bank of Pakistan (SBP) on Thursday, the foreign exchange reserves held by the central bank has recorded an increase of 5.3% on a weekly basis. On December 27, the available information regarding foreign currency reserves held by the SBP were recorded at $11,489.4 million, which were up by $582 million compared with $10,907.3 million in the previous week. “This increase is attributed to bilateral and multilateral inflows including $452.4 million received from the IMF under the Extended Fund Facility (EFF),” the statement added.

The reserves had earlier considerably witnessed a continous downward spiral leading leading to negative experience depicted through fall below the $7-billion mark, which sharply raised concern over Pakistan’s ability to meet its financing requirements. However, financial assistance received from the United Arab Emirates (UAE), Saudi Arabia and other friendly nations assisted in triggering the staggering foreign exchange reserves. Over the period of time, the declining reserves led the the central bank to depreciate the rupee  massively, raising concern about the country’s ability to finance a hefty import bill as well as meet debt obligations in coming months.

In December 2019, the foreign exchange reserves exceeded the $10-billion mark owing to inflows from multiple lenders including the $1.3 billion received from the Asian Development Bank (ADB). Foreign investment of over $1 billion in the debt market possessed significant role in strengthening the foreign currency reserves.

The liquid foreign currency reserves held by the country stood at $18,081.4 million, including net reserves held by banks other than the SBP. The Net reserves held by banks amounted to $6,592 million. 

Pakistan benefited significantly through the first loan tranche of $991.4 million from the IMF on July 9, which helped bolster the reserves. Previously, however, the reserves witnessed sharp increase due to $2.5 billion amount of inflows from China.