KARACHI, Nov 20: Pakistan has received $600 million US grant as part of a $1 billion package that Washington had pledged for Islamabad last week.

A State Bank spokesman told Dawn by telephone with the inflow of this amount Pakistan’s liquid foreign exchange reserves had risen to the highest ever mark of $4.217 billion.

The country had $3.607 billion worth of liquid forex reserves on November 10. Of that $2.041 billion was with the SBP and the rest with all the banks operating in the country. Now with the arrival of $600 million US grant the SBP reserves have risen to $2.652 billion whereas the reserves with the banks stand around $1.565 billion.

The $600 million US grant is the first inflow out of multi- billion dollars funds pledged by Washington in recognition of the support Pakistan is extending to the US-led coalition in their “war against terrorism in Afghanistan.”

The grant is meant for budgetary support aimed at enabling the government to implement reforms and to mitigate the impact of the economic downturn.

Senior bankers say with the foreign exchange reserves now at more than $4 billion Pakistan is well-positioned to further liberalize its foreign exchange regime. The total reserves are enough to finance Pakistan’s import bill for about five months.

“But technically speaking that part of the reserves which is held by the banks is not meant for this purpose,” commented head of a local bank.

At the end of fiscal 2000-01 in June Pakistan’s liquid forex reserves stood at $3.220 billion that kept rising since then. Senior bankers say a major buildup in the reserves was seen in the last two months as overseas Pakistanis transferred back home part of the wealth they had put in foreign banks. They did this as the US froze many foreign currency accounts of in the wake of the September 11 terror attacks on New York and Washington and central banks in the Europe and in the Gulf tightened checks on money laundering.