State Bank of Pakistan’s Forex Reserves Drop to almost a 4-Year Low
The central bank of Pakistan has stated that the foreign exchange reserves of the country have collapsed to $6.7 billion. The respective level is the lowest in approximately 4 years amid the country’s fight against the economic crisis.
The State Bank of Pakistan says, “the country desperately requires foreign aid that would minimize its present account deficit.” As per the organization, this will guarantee substantial reserves to recompense its debt responsibilities for the coming financial year.
Forex Reserves of Pakistani Central Bank Dip near a 4-Year Low
The data expresses that Pakistan’s forex reserves have slumped by $784 million since November’s latter period while the commercial banks are holding an additional $5.8 billion.
Previously, the forex reserves of the country plummeted below the $7 billion mark in January 2019, reaching $6.6 billion. Jameel Ahmad, the SBP governor, appeared in an interview on Thursday to comment on the economic crisis in Pakistan.
As per Ahmad, the chief reasons behind the economic crisis of the country took into account the disastrous floods, an increase in food prices across the globe, as well as the ongoing war in Ukraine.
Ahmad disclosed that the country recompensed $1B against the maturing bonds thereof as well as the rest of the outdoor debt repayments. As per the governor, the respective move resulted in Pakistan’s foreign reserves’ depletion.
The country needs to recompense almost $33 billion to foreign lending bodies in the impending fiscal year. The central bank’s head mentioned that up to $500 million has been given to Pakistan by Asian Infrastructure Investment Bank last week to counterbalance its payment.
Ahmad added that the authorities of the country are discussing pursuing approximately a $3 billion amount from a friendly nation but no details have been provided about it yet.
In an analogous advancement, Mohammed al-Jadaan (the finance minister of Saudi Arabia) disclosed on Thursday that the country will keep supporting Pakistan according to its capacity. Reports from the local media pointed out that Pakistan would potentially get a package of up to $4.2 billion from Riyadh.
In the meantime, a review started by the International Monetary Fund in September for the issuance of a bailout package of nearly $7 billion for Pakistan has not yet been accomplished.
Review for IMF’s $7B Bailout Package for Pakistan Delays
The global financial entity agreed to provide a bailout package of almost $6 billion in 2019 while an extra $1 billion was promised by it formerly in 2021. Ishaq Dar, the finance minister of Pakistan, showed a commitment to accomplishing the program of IMF while coping with on-time outdoor debt payments. The finance minister alleged that IMF was procrastinating its review.
In his words, everything is organized and going through the usual circumstances. Dar revealed having reassured the IMF regarding the good condition of their 9th review. In a television interview, he moved on to say that in case IMF does not come to help, the country’s authorities will manage.
A previous advisor to the finance ministry of Pakistan, Dr. Khaqan Najeeb, was of the view that the country requires a rapid completion of the IMF’s stalled review.
As per him, the huge payments, the sluggish funds’ inflow, as well as lower than expected financial revenue have put significant pressure on the reserves. Shahrukh Wani, a University of Oxford-based economist, suggested that Pakistan should endeavor to persuade the IMF that it would comply with the bailout conditions.
