KARACHI: The crisis of foreign exchange reserves has further escalated as the country’s total liquid forex reserves fell sharply by about $1 billion during last week due to external debt servicing.
According to the State Bank of Pakistan’s weekly report issued Thursday, the country’s total liquid foreign exchange reserves (including SBP and commercial banks) stood at $9.453 billion as of Jan 13, 2023 compared to $10.4436 billion, depicting a decline of $990.4 million in a week.
During the week under review, the SBP’s foreign exchange reserves fell by $923 million to $3.678 billion by the end of last week down from $4.601 billion a week earlier. The current level of foreign exchange reserves held by the SBP can cover only three weeks imports and it was the lowest level since Feb 2014.
Forex reserves held by commercial banks also witnessed a downward trend falling by $67 million to $5.775 billion by the end of last week. Pakistan for the last one year is facing s serious crisis of foreign exchange reserves due to massive external debt servicing and lower foreign inflows.
Although, the government is making efforts to bring more inflows into the country and recently in Geneva Conference, friendly countries and international financial institutions pledged some $10 billion. In addition, the government is willing to revive IMF’s Extended Fund Facility (EFF) program and the IMF mission is due to arrive by the end of this month for 9th review. The successful review will help release the next tranche of EFF program.
However, still the forex reserves crisis is escalating as major foreign inflows including home remittances are on decline.
The massive and continuous decline in the foreign exchange reserves also depreciated the Pak rupee against the dollar and after the removal of cap on exchange rate by the exchange companies the rupee immensely weakened Thursday. It witnessed a significant depreciation of 9.61 percent against the USD to stand at 255.43 down from 230.89 Wednesday.
Recently, Governor State Bank of Pakistan (SBP) Jameel Ahmed said that Pakistan is out of default as major external debt payments of $15 billion have been settled in the first half of FY23.
However, still the country needs to settle some $8 billion foreign debt in the remaining period of this fiscal year.
According to the SBP, cumulative financing requirements, for this fiscal year, were $33 billion including $10 billion of current account deficit and $ 23 billion of external debt. The country has successfully settled principal repayments of $15 billion so far during the current fiscal year. Out of this amount, $9 billion were paid and $6 billion were rolled over, he maintained.
The remaining $8 billion needs to be settled in next five months of this fiscal year.
According to the SBP, out of $8 billion, some $ 3 billion will be rolled over and some $2.2 billion will be paid and reverted to Pakistan and overall, the country has to pay external debt worth $3 billion by the end of June 2023.
Copyright Business Recorder, 2023
Comments
Comments are closed for this article.