Pakistan’s net international reserves stand at negative $4b, excluding IMF debt obligations

Till September 2018, SBP had obtained $7.22 billion from commercial banks in the aegis of forward and currency swap arrangements

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ISLAMABAD: Figures released by the State Bank of Pakistan (SBP) on Wednesday have revealed that the country’s balance of payment crisis isn’t over since its net international reserves are negative $4 billion even after eliminating IMF debt obligations.

The figures released by the central bank show up to one-year obligations of the central bank surpass its gross official foreign currency reserves by around $4 billion, reports Express Tribune.

Last week, the gross official reserves of SBP were recorded at $8.2 billion against its short-term liabilities which stand around $12.2 billion.

SBP’s gross official reserves are mostly retained by contracting short-term loans from commercial banks and taking Chinese and Saudi deposits under currency swap arrangements.

Till September 2018, SBP had obtained $7.22 billion from commercial banks in the aegis of forward and currency swap arrangements.

Also, SBP needs to return $1.5 billion within a month, $3.2 billion within three months and a remainder of $2.6 billion in a years’ time, official data reveals.

Swap deals reached with commercial banks are in the range of 2.5% to 4% interest rates, as per banking sector sources.

Moreover, the central bank owes $1 billion to Saudi Arabia, $3 billion to China and $700 million to various lenders, said sources.

And approximately $453 million are repayable to the IMF in current FY19, which will directly be deducted from SBP’s reserves.

As per the IMF’s definition of Net International Reserves, SBP’s reserves would stand at -$9.7 billion after inclusion of its overall $6 billion obligations.

However, the IMF’s repayments are to be done over a period of coming five years, hence, all the amount cannot be eliminated against the short-term liabilities of SBP.