ISLAMABAD      -       Pakistan’s foreign exchange reserves have surged to $15.58 billion after receiving loan from the Asian Development Bank (ADB).

“During the week ending 09August2019, the SBP’s reserves have increased by $535 million to $8,264.4 million. The increase in SBP’s reserves is mainly due to inflow of $500 million received from Asian Development Bank (ADB),” said a brief statement of the State Bank of Pakistan (SBP).

The country’s overall foreign exchange reserves have recorded at $15.58 billion, which included $7.3 billion net foreign reserves held by commercial banks.

The ADB on August 7, 2019 had approved a $500 million policy-based loan to support the Government of Pakistan’s reforms to improve trade competitiveness and exports as a defense against external shocks and to help finance the country’s trade deficit.

It is worth mentioning here that ADB had policy loan for Pakistan after approval of IMF programme. The ADB plans to provide about $2.1 billion out of $3.4 billion funds to support Pakistan’s reform and development programmes during fiscal year 2019-20.

Pakistan’s foreign exchange reserves had started increasing after receiving loans from Qatar, International Monetary Fund and now ADB.  The IMF had already released one billion dollars for Pakistan under extended fund facility.

The IMF would release the second tranche of around one billion dollars during current fiscal year if Pakistan meets the structural benchmarks of the Fund. 

The SBP had already received inflow of $500 million from Qatar as placement of funds. Qatar had committed to place $3 billion in SBP’s account on the request of government of Pakistan.

According to the ministry of finance officials, the reserves would further increase in the months to come.  The government has decided to issue short term bonds and Sukuks to raise resources from the international market to build foreign exchange reserves of the country.

The federal government in annual budget for current fiscal year 2019-20 had projected to generate Rs450 billion (around $2.8 billion) for the Sukuk bonds. 

However, it had not estimated any amount from the Eurobonds in the budget documents during current fiscal year. The amount generated from Sukuk and Eurobonds would help in building the country’s foreign exchange reserves.

The incumbent government is taking massive loans to repay previous loans and maintain the country’s foreign exchange reserves.

The government had taken $16.3 billion loans from multilateral and bilateral sources during previous fiscal year. Pakistan had received over $10.8 billion as foreign assistance in the year 2018-19.

Meanwhile, it had also borrowed $5.5 billion from friendly countries as Pakistan borrowed from Saudi Arabia, United Arab Emirates (UAE) and Qatar. Saudi Arabia had given $3 billion, UAE $2 billion and Qatar $500 million.c