Pakistan to borrow Gold from citizens to increase foreign exchange reserves: Report

Crippled under rising debts, Pakistan is planning a proposal to borrow gold from its citizens to increase its foreign exchange reserves. According to State Bank of Pakistan (SBP), as of February 11,  central bank's reserves which have been on a constantly declining path furr slid to USD 17 billion. 

In a desperate measure to boost forex reserves, Imran Khan-led government has discussed a proposal in  Economic Executive Council (EEC) – body comprising all economic ministers and State Bank of Pakistan (SBP) governor to borrow gold biscuits and bars from citizens, Express Tribune newspaper reported, citing sources in Ministry of Finance. 

What is Imran Khan Govt's proposal?

proposal to borrow gold from people against a negotiable instrument h initially been floated by an expatriate, Tahir Mehmood, to Prime Minister Khan, who n referred it to EEC. According to media reports, proposal will allow commercial banks to issue a negotiable discounted instrument to gold owner and pay an interest rate on precious metal. In return, banks will deposit gold with SBP that can monetise it to increase foreign exchange reserves. 

objective of gold-based negotiable instruments was to "translate gold into foreign currency to enhance foreign exchange reserves," Finance Minister Shaukat Tarin h explained in  last EEC meeting.

Notably, Pakistan's foreign exchange reserves are alrey largely built on its expensive foreign loans. In less than three months, it has taken a USD 3 billion loan from Saudi Arabia, raised country's most expensive debt of USD 1 billion by pledging motorway and received anor USD 1 billion from International Monetary Fund (IMF) on stringent conditions. However, Pakistan's reserves failed to get stabilised due to lower exports and higher imports along with growing foreign loans repayments.

(With agency inputs)