Benefits of foreign exchange reserves are many but some economists are unable to realise the situation and calculate the positive aspects of this highly valuable contribution, said Governor State Bank, Dr Ishrat Husain on Monday while addressing members of Rotary Club.
He said that Pakistan would survive even if a single penny does not come from the United States.
He said President Musharraf did not ask for US help but President Bush offered him this aid.
In his speech over the forex reserves, Dr Husain explained and discussed various areas, which directly benefit from foreign exchange reserves which currently stand at over $12.5 billion.
He said the country has entered the area where its credit rating improved and credit-worthiness has significantly gone up.
This was the first time that the country had come out from fear of default. The most important thing was that "we established the exchange rates" which brought enormous change for the economy.
The exporters are no more afraid what they would get after receiving dollars, as the exchange rate has stabilised.
He said in 1999 the country's reserves were just over one billion dollars while Indian reserves were 40 billion dollars. India has eight times bigger economy. "If we compare India's current 100 billion dollars reserves with our 12.6 billion dollars, then it shows that India's reserves are higher by eight times which is in accordance with the volume of the economy."
He said the debt servicing has dropped to 31 percent of the revenue, which provides more fiscal space for development expenditures, and it happened because of rescheduling of debt.
He said the high foreign exchange reserves developed a smooth mechanism of supply and demand of dollars.
He once again made it clear that the foreign exchange reserves belong to the public and government could not use it. The State Bank is the custodian of the foreign exchange reserves.
He said export financing has come down to only 3 percent, which is much lower than India and Bangladesh.
The SBP Governor said that the dollar is overvalued to help the exporters.
He said: "We have made agreement with foreign funds for the use of foreign exchange reserves. We don't have the expertise to manage the foreign exchange serves."