Central bank governor Jameel Ahmad said the country will see dollar inflows in the coming days after funding commitments from the Middle East.
By Staff Reporter
KARACHI: The Abu Dhabi Fund for Development (ADFD) has rolled over its existing deposits of $2 billion and the country will see also dollar inflows in the coming days after funding commitments from the Middle East, senior government officials said on Wednesday, moth the moves likely to bring some relief to the cash-strapped country.
“Abu Dhabi Fund for Development (ADFD) has rolled over their deposit of $2 billion with State Bank of Pakistan,” finance minister Ishaq Dar wrote on Twitter.
Earlier in the day the central bank governor Jameel Ahmad told a group of businessmen in Karachi that the country will see dollar inflows in the coming days after funding commitments from the Middle East.
Though Governor Ahmad didn’t give any details where the central bank would get them from or the exact amount.
Last week Prime Minister Shehbaz Sharif’s Office said the United Arab Emirates would provide an additional $1 billion loan to Pakistan after Shairf’s meeting with UAE President Sheikh Mohammed bin Zayed Al Nahyan in Abu Dhabi.
The Saudi Fund for Development (SDF) also signed an agreement with the Ministry of Economic Affairs to finance oil derivatives worth $1 billion to Pakistan.
Last month, Saudi Arabia extended the term of a $3 billion deposit to the State Bank of Pakistan for one year.
Analysts said inflow and rollover of loan will bolster the country’s fast depleting foreign exchange reserves. The central bank foreign reserves fell to a critical level of $4.3 billion in the week ending January 6, barely enough for three weeks of imports.
Abu Dhabi and Riyadh have come to Pakistan’s financial aid whenever Islamabad finds itself in desperate need of external financing.
Back in Karachi, Governor Ahmed told a group of businessmen that the central bank’s biggest strain is its limited resources. The central bank used to intervene in the interbank market in the past “but it is not in a position anymore because of dwindling reserves.”
“We are expecting inflows shortly that would help reduce pressure on our foreign exchange reserves,” the central bank chief assured the business community.
Dollar shortage in the country has restricted imports. About 6,000 containers of essential food items, raw materials, medical equipment and others are held up at various ports. Banks have also refused to issue new letters of credit for importers.
Governor Ahmed said the central bank has facilitated shipments under the categories of essential, energy, export-oriented industries, agriculture inputs, deferred payment / self-funded imports and imports for export-oriented projects near completion.
“The SBP has no objection if importers arrange the dollars themselves as exporters are allowed to import from their export proceeds,” the governor said, hoping that the opening of LCs would be expedited soon, once the dollar inflows materialised.
“We want to facilitate all the industries, however we can only do so under our given capacity of inflows. We do not produce dollars locally, they come through exports, remittances and inflows from lenders.”
The country’s economic woes deepened after the International Monetary Fund delayed its latest loan installments under a bailout programme.. Pakistan’s ninth review of staff-level talks with the IMF for the release of its next tranche has been delayed since September.
The differences between the two sides persisted over tax collection targets, and non-starter energy reforms including hiking of gas tariff, rising circular debt, and expenditure overrun, making it difficult to have consensus on a staff-level agreement for completion of the review.
Pakistan entered the $6 billion IMF programme in 2019, which was raised to $7 billion this year. The country will get $1.18 billion after the programme’s ninth review.
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