Foreign exchange reserves held by the State Bank of Pakistan (SBP) dropped a massive $592 million to a mere $3.09 billion, data released on Thursday showed. This is the lowest level of central bank reserves since February 2014.

Total liquid foreign reserves held by the country stood at $8.74 billion. Net foreign reserves held by commercial banks stood at $5.65 billion.

“During the week ended on January 27, 2023, SBP’s reserves decreased by $592 million to $3,086.2 million due to external debt repayments,” the SBP said in a statement.

Last week, foreign exchange reserves held by the SBP dropped a massive $923 million to a mere $3.7 billion.

The current level of reserves is at less than one month of import cover.

The central bank reserves, which stood at nearly $18 billion at the start of the 2022 but have undergone significant depletion, underscore the urgent need for Pakistan to complete the next review of the International Monetary Fund (IMF) programme.

An IMF delegation is currently in Islamabad to hold talks for the ninth review under the Extended Fund Facility (EFF). Talks on the ninth review have remained stalled since September last year over prior conditions of the Washington-based lender that has called for a market-determined exchange rate, resolution of issues within the power sector, and a roadmap for achieving tax targets.

Although the country is facing a serious crisis of foreign exchange reserves, it is meeting international financial obligations to avoid default.

Pakistan has also moved to curb dollar outflow through restrictions on imports. Many businesses have either scaled back or shut down operations after their inability to open letters of credit (LC) amid the foreign currency shortage.

At the same time, policymakers are scrambling to secure inflow of dollars without much success.

A low level of reserves has put pressure on the rupee that closed at a record low of 271.36 against the US dollar after a decrease of 0.93% on Thursday.