Import cover at 1.71 months as reserves decline to $17.477bn

The total liquid foreign reserves held by the country stood at $17,476.9 million as of April 1, 2022, the lowest level since June 2020.

During the week ended in April 1, 2022, SBP reserves decreased by $728 million to $11,319.2 million, largely due to debt repayment and government payment pertaining to settlement of an arbitration award related to a mining project.

Total reserves are down by $1,078 million. A breakdown of this shows that SBP reserves stand at $11.3 billion, and are down by $728 million. Bank reserves are down by $350 million, clocking in at $6.2 billion.

The total liquid FX reserves have declined $1.078 billion over last week which is equivalent to a 5.8% decline week on week. The import cover has declined from 1.82 months to 1.71 months based on average imports of the last 12 months.

Going forward, the import cover is likely to decline further as the import bill for the corresponding 12 months is likely to be higher, whereas, reserves are not growing organically.

On March 25, the foreign currency reserves held by the SBP were recorded at $12,047.3 million, down $2,915 million compared with $14,962.4 million on March 18.

The decline is due to the repayments of external debt, primarily the repayment of a major syndicated loan facility from China.

In totality, China has granted rollover of approximately $4.5 billion in loans to help Islamabad manage its external sector vulnerabilities.

What this means is that the $2.3 billion that has just left the reserves will be back shortly.