Pakistan has enough dollars to meet foreign obligations, says SBP governor

KARACHI: State Bank of Pakistan (SBP) Governor Jameel Ahmad said on Monday the country has enough dollars in its coffers to meet foreign debt obligations.

Speaking to the press on the sidelines of a ceremony at the Institute of Business Administra­tion (IBA), Mr. Ahmad said there’s no reason to worry about a shortage of foreign exchange liquidity. “Our reserves are over $7.9 billion. They’re more than sufficient to meet any obligations,” the governor said.

Foreign exchange reserves of the SBP dropped $956 million during the week ending on Nov 4 because of external debt servicing, including a $500m commercial loan repayment to China.

The SBP governor’s statement coincided with Pakistan’s risk of sovereign default hitting a multi-year high at the end of last week.

The country’s five-year credit default swap (CDS) — a type of insurance against the risk of sovereign default — increased by almost four percentage points on a day-on-day basis to 64.2 percent on Nov 11.

The rising CDS level is reflective of investors’ dwindling confidence in Pakistan’s ability to pay back its international loans.

According to Arif Habib Ltd, the five-year CDS went up by 4,210 basis points — or 42.1 percentage points — to 6,419 basis points on a month-on-month basis.

Mr Ahmad said all letters of credit (LCs) amounting to less than $100,000 will be cleared by the end of this week. Many businesses, especially those catering to domestic demand for goods, couldn’t make dollar-denominated payments to their foreign suppliers owing to the recent restrictions on the outflow of foreign exchange.

“We’re also facilitating (imports for) export-oriented projects. There’re some businesses whose projects are nearing completion. We’ve cleared their imports. Moreover, for some specific sectors, we’re allowing the equivalent of 50-60pc of their past imports,” said Mr. Ahmad without elaborating further.

With regard to the ongoing investigation into the alleged manipulation of the exchange rate by more than eight commercial banks, the SBP governor said the central bank’s team looking into the matter will complete its task by the end of November. “We’ll then take all the required regulatory actions,” he said.

Earlier, the SBP governor inaugurated IBA’s Finance Lab, which will allow students access to real-time data from the capital markets. The institute’s business school has set up the lab in collaboration with Alpha Capital Securities, a Karachi-based brokerage run by IBA alum Muhammad Azfar Naseem.

The SBP governor said the Finance Lab should consider collaborating with related disciplines to conduct studies on business processes, market sizing, and value chain assessments of various products from the perspective of growth and innovation.

He also suggested that the lab should collaborate with credit bureaus to test and create credit-scoring models, especially those based on alternate data or otherwise aimed at the segments of individuals and businesses that have no collateral and little credit history.

Admin Mail : [email protected]

- Advertisement -
- Advertisement -

Latest article

Liver Detox :Tea Incredible Benefits of Liver Cleanse Tea

If you’re like most people, your liver is one of your body’s essential organs. It’s responsible for processing and eliminating toxins from the body,...

Known Benefits Of Daily Skincare Routine

Guys, when it comes to taking care of your skin, remember that a good skincare routine does not have to be complicated. Opting for...

Drinking Milk On A Regular Basis Has Many Health Benefits

The Dietary Guidelines for Americans recommends that Americans consume three cups of milk each day. It is a great source of calcium and offers...

Often Should You Get Deep Tissue Massage Therapy

Your body and mental relaxation should your priority. Having some “me time” at the end of a hectic day is essential. Massage is good...

Keep Our Skin Healthy

There are several different ways to keep our skin healthy. These include drinking lots of water, avoiding alcohol and smoking, and using moisturizers. These...
error: Content is protected !!