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 per cent 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 Azfer 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.

Published in goodnewsetc, November 15th, 2022

Related Stories

Discover

10 Steps to Unlocking the Potential of Free Bitcoin

Bitcoin, the revolutionary digital currency, has captured the world's attention with its promise of...

How to Fix [pii_email_a5e6d5396b5a104efdde] Microsoft Outlook Error?

Error ? No fears, here are some guidelines that are likely to solve...

WHAT NEXT? THE PASTORS’ RAPID RESPONSE TEAM IS ESSENTIAL

In the midst of the din that was Velocity, Saturday night at the Billy...

Life in the Universe (textbook)

Courses on the exciting subject of astrobiology are sprouting up on college campuses like...

How To Make Your Ex Regret Leaving You

If you’ve been dumped, it’s natural to want to make him regret his decision. I’m...

Welcome to the graveyard

BBEY has become the latest lender to close one of its savings accounts, in...

Popular Categories

Comments

LEAVE A REPLY

Please enter your comment!
Please enter your name here