Pakistan receives $1.5b loan

KARACHI: Pakistan received a loan of $1.5 billion from the Asian Development Bank (ADB), which helped improve the dwindling foreign exchange reserves that reached $9 billion on Wednesday.
The development, however, failed to support rupee against the US dollar amid growing political noise.
The domestic currency reversed course and depreciated 0.43% (or Rs0.95) to close at Rs220.68 to a dollar in interbank market.
With that, the winning streak of past three consecutive working days, when the rupee regained 0.54% (or Rs1.18), came to an end.
It will continue to move in a band of Rs215-220 against the greenback in short run, experts believe.
“The Asian Development Bank has released $1.5 billion under BRACE (Building Resilience with Active Countercyclical Expenditures) programme for credit into government of Pakistan’s account with the State Bank of Pakistan,” said Finance Minister Ishaq Dar on his Twitter handle.
The loan is aimed at strengthening social protection by increasing the number of families receiving financial assistance every month, and improving food security and employment.
Besides, it will help in absorbing external economic shocks like increase in international oil prices in the wake of Russia-Ukraine conflict.
With the receipt of $1.5 billion loan, Pakistan’s foreign exchange reserves are believed to have improved to around $9 billion.
Earlier, the reserves depleted to 40-month low at $7.6 billion in the week ended October 14, 2022. They stood at $20 billion in August 2021, according to central bank data.
Reserves of $7.6 billion were barely enough for 1.1 months of imports, which caused panic among global investors who had poured money into Pakistan’s US dollar-denominated bonds in the international market. Yields on the bonds (Eurobond and Sukuk) went up significantly and five-year credit default swap (CDS), a barometer to gauge the country’s default risk, hovered at 13-year high of 52.8% on Tuesday (October 25).-PNP