SBP closing forex window for oil imports

[Naveed Yaseen]

KARACHI: Pakistan has begun phasing out this month the use of central bank foreign exchange reserves to pay for oil imports, forcing commercial banks to find currency, a central bank spokesman said on Friday.

The move was made to comply with an undertaking to the International Monetary Fund in November in return for an emergency $7.6 billion loan package to stave off a balance of payments crisis.

From Feb 1, the central bank no longer provided dollars to pay for imports of furnace oil, used to fuel power stations, and from Aug 1 it would stop providing the currency for imports of diesel and other refined products.

The central bank would carry on providing currency for crude oil imports until Feb 1 next year.

Syed Wasimuddin, the chief spokesman for the State Bank of Pakistan, said furnace oil payments had represented about 22 per cent of the total drain on reserves from oil imports.

According to the latest official data, Pakistan’s oil import bill rose 38.6 per cent to $5.88 billion during the first half of the fiscal year to June 2009, compared with a year earlier.

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