KARACHI: The net foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased $266 million to $10.096 billion, during the week ending June 5, 2020, according to data released by the central bank on Thursday.
Net foreign reserves held by commercial banks increased slightly, from $6.55 billion to $6.609 billion.
The total liquid foreign reserves held by the country fell significantly from $16.92 billion in the week ending May 29, to $16.71 billion during the week under review.
The SBP stated that the decrease could be attributed to the government’s external debt repayments of $301 million.
Reserves have been steadily falling since the week ending April 30, mostly on account of external debt repayments, though none as large as the repayment of the week ending May 29.
That week saw a plunge of $1.712 billion in SBP reserves, which was the largest-ever weekly drop recorded in a decade, according to some reports.
It also brought the SBP net reserves down to $10.362 billion, or levels last seen in the week ending December 6, 2019.
According to SBP data, SBP net reserves hovered between the $7 billion and $8 billion region between April and October 2019.
However, starting in November 2019, SBP reserves crossed the $9 billion mark. Reserves were also helped by a $1.3 billion loan from the Asian Development Bank (ADB) in December 2019. Reserves then steadily increased to a peak of $12.8 billion in the first week of March 2020.
But beginning mid-March, reserves began to decline. SBP reserves fell from $12.8 billion to $10.8 billion between March 13 and April 17.
However, in the week ending April 24, SBP reserves got some significant help from the International Monetary Fund (IMF), jumping from $10.889 billion to $12.070 billion. This can be mainly attributed to the $1.39 billion received from the IMF under the Rapid Financing Instrument (RFI), to address the economic impact of the Covid-19 shock.
However, since then, SBP reserves fell over the course of May, to $12.073 billion during the week ending May 21, 2020. The SBP attributed the declines to external debt repayments.
Reserves are expected to decline, as the combined pressure of a fall in exports and remittances due to the Covid-19 pandemic, and a rise in external debt repayments like those of May 2020, may see the net SBP reserves fall to below double digits later this year.
