After receiving a loan from the Asian Development Bank (ADB) and a tranche from International Monetary Fund (IMF), the foreign exchange reserves of Pakistan will surge to nearly $11 billion by the end of December 2019. It will most probably be approved in the next couple of weeks.
The IMF’s executive board will meet before Christmas and consider approving the second tranche worth $450 million for Pakistan. For the first review under extended fund facility (EFF) the IMF visited Islamabad from 28th October to 8th November. IMF was satisfied with the economic performance of Pakistan. The authorities were praised by the IMF for performing really well on the first-quarter targets. This, in turn, paved the disbursement of $450 million.
Two different loans for Pakistan were approved by ADB worth of $1.3 billion. $1 billion was approved in immediate budget support to Pakistan to give a boost to the public finances of Pakistan and help in strengthening the slowing economy.
Also, the ADB approved a $300 million policy-based loan that will help the Pak government to address financial sustainability, governance, and energy infrastructure policy constraints in the energy sector of Pakistan.
The foreign exchange reserves of Pakistan will increase with the inflows of loans from ADB and IMF. It will reduce pressure on the local currency. On 29th November 2019, the foreign reserves of Pakistan stood at $15,993.2 million.
State Bank of Pakistan’s foreign reserves is $9.113 billion while the foreign reserves held by commercial banks are $ 6.88 billion. The ADB and IMF loan inflow would take the State Bank of Pakistan reserves to $10.86 billion by the end of December.
A loan agreement worth $1.3 billion was signed between the government of Pakistan and the Asian Development Bank.