KARACHI (January 09 2003) : Dr Ishrat Husain, Governor of the State Bank of Pakistan (SBP), said on Wednesday the government planned to invest 10 percent of its foreign exchange reserves through international investment banks.
“We are going to hire an international consultant company to advise us and screen some of the international investment banks,” the SBP governor told Reuters in an interview.
Pakistan's foreign exchange reserves rose to a record high of $9.349 billion in the week ending December 28, of which the central bank's direct holdings were $7.577 billion.
Pakistan says its total foreign exchange reserves are set to cross the $10 billion mark by the end of the current fiscal year (July-June).
Dr Husain said the strong reserves position had enabled Pakistan to plan the investment move for the first time.
The central bank did not have in-house capacity to manage the reserves, he added.
“It is for the time we have a surplus,” Dr Husain said. But he added: “The central bank has to be very cautious and conservative” that it did not expose itself to any risk.
Husain did not give any deadline for the proposed investments, saying “we are working on it”.
Pakistan's foreign exchange reserves have soared on the back of aid and grants from the United States and its Western allies in return for Islamabad's support for the US-led war in neighbouring Afghanistan.
The Paris Club of donor countries also rescheduled $12.5 billion of Pakistan's foreign debt, allowing Islamabad the much-needed breathing space to revive its ailing economy.
Remittances from Pakistanis living abroad through official banking channels also helped the country boost its reserves.
Earlier most Pakistanis had sent money through unofficial or private channels. But the international crackdown on money laundering in the wake of the September 11, 2001 attacks in the United States forced them to switch.
Pakistan's foreign exchange inflows through banks rose to $1.784 billion in the first five months of fiscal 2002/03 (July/June) from $789 million in the same period last year.