Foreign reserves held by the State Bank of Pakistan (SBP) plunged below $3 billion after payment of a Chinese loan worth $1 billion. 

Sources having knowledge of the matter said Pakistan paid a Chinese loan of $1 billion after which SBP’s held reserves fell to a critically low level.

The sources further said after the presentation of the budget for FY2023-24, the first contact was established between Finance Minister Ishaq Dar and IMF’s Nathan Porter. No big development has taken place during the virtual meeting between Ishaq Dar and IMF.

In order to address the concern of the international lender, another meeting with the IMF will be held tomorrow, the sources said.

Meanwhile, an analyst of Moody’s Investor Service in an interview with Bloomberg said Pakistan is heading towards ‘default’ and added Pakistan cannot complete the current IMF loan program until June 30.

Earlier in the month of May, Moody’s said Pakistan could default without an International Monetary Fund (IMF) bailout as its financing options beyond June are uncertain.

According to the Bloomberg report, Grace Lim, a sovereign analyst with the ratings company in Singapore, said that Pakistan’s financing options beyond June are highly uncertain and South Asian country can “default” given its very weak reserves.