ISLAMABAD: The government is considering a proposal to borrow gold biscuits and bars from the people to increase foreign exchange reserves that remain on a sliding path despite taking over $5 billion loans in the past three months from bilateral and multilateral creditors.
The proposal has been discussed in the Economic Executive Council (EEC) – the body comprising all economic ministers and the State Bank of Pakistan (SBP) governor, according to the sources in the Ministry of Finance.
According to the proposal, the commercial banks will issue a negotiable discounted instrument to the gold owners and pay an interest rate on the precious metal. The commercial bank will deposit the gold with the SBP that can monetise it to increase the foreign exchange reserves –already largely built by taking expensive foreign loans.
The central bank already has 2.01 million fine troy ounces of gold reserves valued at $3.8 billion, according to the SBP’s reserves position statement of December 31, 2021.
The central bank’s reserves have constantly been on a declining path and further slid to $17 billion as of February 11, according to the SBP statement. In the past three months, the government took a $3 billion loan from Saudi Arabia, raised the most expensive debt of $1 billion in Pakistan’s history by pledging motorway and received another $1 billion from the International Monetary Fund. But still the reserves could not be stabilised due to lower exports and higher imports along with growing foreign loans repayments.
