Pakistan’s forex reserves hit 8-yr low; enough only for 3 weeks of imports

Pakistan’s central bank’s foreign reserves have dwindled to an eight-year low despite the government’s efforts to shore up its economy. The State Bank of Pakistan’s (SBP) reserves hit $5.576 billion during the week ended December 2022. In January 2022, the reserves amounted to $16.6 billion, which means the reserves dipped $11 billion by the end of the year. 

According to a report by Pakistani media site, Dawn, the SBP foreign exchange reserves saw an outflow of $245 million for external debt repayments. The massive decline in forex has left no space for the government to repay its foreign debts without borrowing from friendly countries, the report added. 

With this much number of reserves, Pakistan has enough only for imports of three weeks. 

According to the news site, several attempts to restart talks with the IMF for release of the next tranche have so far not been fruitful. The local currency has already been devalued against the US dollar and other major currencies. Pakistan’s inflation is at decades-high. Not only that, it is also braving a political crisis and energy crisis. 

Pakistan has received financial help from allies China and Saudi Arabia in the past, but as per analysts these two countries are holding off until Pakistan gets the IMF’s nod. 

Meanwhile, Finance Minister Ishaq Dar is hopeful of the country recovering with help from the friendly countries. However, something is yet to materialise. 

Additionally, thousands of shipping containers have been held up at the Karachi port as banks have been unable to guarantee foreign exchange payments. The cargo includes perishable foodstuff and medical equipment. Paying for commodities such as medicine, food and energy have become the primary concern. 

(With agency inputs)

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