KARACHI: Repayments of external debt caused the State Bank of Pakistan’s (SBP) foreign exchange reserves to drop $276 million to $11.448 billion in the week ending January 17, the central bank said on Thursday.
In Davos, Finance Minister Muhammad Aurangzeb announced that Pakistan has reached an agreement with two Middle Eastern banks for a $1 billion loan with an interest rate of 6 to 7 percent.
Despite the rollover of loans by the UAE and Saudi Arabia, the nation faces difficulties in fulfilling its debt. The nation’s economic team is working frantically to get China to roll over its debt.
According to Mr. Aurangzeb, the two Middle Eastern banks would provide a short-term loan. But taking out a loan at commercial rates would put further strain on the nation’s external account.
In addition, multinational corporations’ profit repatriation increased by 114% to $1.215 billion in the first half of the current fiscal year (FY25) compared to $568 million in the same period previous year.
Including the commercial bank’s holdings, which increased by $14 million to $4.70 billion during the reviewed week, the nation’s total reserves decreased by $261 million to $16.189 billion.