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The Begging Bowl Becomes Wider

– Pak’s Forex Reserves fall be 3.22 percent at $7.26-bn The foreign exchange reserves held by the central bank plunged 3.22% on a weekly basis, for the second successive week, according to data released on Thursday.

Earlier, the reserves had been on a downward spiral for 13 successive weeks but financial assistance from Saudi Arabia provided much-needed support to the fast depleting reserves.

The reserves had dropped to a four-and-a-half-year low, which raised concern about Pakistan’s ability to meet its financing requirements. The assistance from the kingdom pushed the reserves above $8 billion, however, now they have once again dropped below that mark.

On December 7, the foreign currency reserves held by the State Bank of Pakistan (SBP) were recorded at $7,260.4 million, down $241.7 million compared with $7,502.1 million in the previous week. The decrease was attributed to external debt servicing and other official payments.

Last month, Chinese Embassy Deputy Head of Mission Zhao Lijian assured Pakistan of a financial package to boost its flagging foreign currency reserves, hinting that it would be bigger than that pledged by Saudi Arabia.

More than a month ago, China agreed to immediately give a loan of $2 billion to Pakistan, a move meant to arrest the slide in foreign currency reserves and provide much-needed breathing space to the new government.

Earlier, the reserves dipped to $9.06 billion, forcing the central bank to let the rupee depreciate massively for the fourth time since December 2017 and sparking concern about the country’s ability to finance a hefty import bill as well as meet debt obligations in coming months.

In April, the SBP’s reserves increased $593 million due to official inflows. A few months ago, the reserves surged due to official inflows including $622 million from the Asian Development Bank (ADB) and $106 million from the World Bank.

The SBP also received $350 million under the Coalition Support Fund (CSF) earlier.

In January, the SBP made a $500-million loan repayment to the State Administration of Foreign Exchange (SAFE), China.

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