KARACHI: The State Bank has received the last IMF tranche of $1.1 billion, which took the central bank’s foreign exchange reserves to $9bn, a requirement from the lender for the ongoing fiscal year.
The inflow was expected as the country was confident due to 100 per cent compliance with the IMF’s conditions attached to the $3bn Stand-By Arrangement (SBA) reached at the end of June 2023.
In a statement on Tuesday, the bank said that the IMF’s executive board had completed the second review under the SBA in its meeting on April 29 and approved the disbursement of 828 million special drawing rights (SDR) for Pakistan, valuing around $1.1bn.
“The amount will be reflected in the SBP’s foreign exchange reserves for the week ending on May 3, 2024,” the bank said.
The State Bank has succeeded in keeping the reserves at around $8bn despite paying $1bn in the second week of April against the maturity of the Eurobonds.
Currency dealers noted the bank’s aggressive dollar purchases in the interbank market, particularly in March, when remittances surged to $3bn during Ramazan.
The SBP buys dollars from the banking market, but the purchasing size was difficult to assess for the markets in March. Some bankers believe the SBP bought at least half a billion dollars during 40 to 50 days ahead of the Eurobond maturity. The SBP doesn’t provide such information.
Finance Minister Mohammad Aurangzeb recently projected that the SBP reserves could reach between $10bn and $11bn by the end of the fiscal year. Negotiations are ongoing with the IMF for a potential new loan package that could lead to an agreement for up to $6bn.
Bankers and financial experts have expressed optimism that the bolstered reserves will help stabilise the exchange rate, which has remained relatively steady over the past three months.
Published in Dawn, May 1st, 2024
