Saturday December 09, 2023

Forex reserves fall to $13.645bn

By Our Correspondent
November 25, 2022

KARACHI: Pakistan’s foreign exchange reserves dropped by $151 million to $13.645 billion during the week ended November 18 on debt servicing, the central bank reported on Thursday.

The reserves held by the State Bank of Pakistan (SBP) decreased by $134 million to $7.826 billion. The decline in the reserves is due to external debt repayment, it said in a statement.

The reserves of commercial banks dropped by $17 million to $5.819 billion.

The country is facing a balance of payments crisis. Despite a recent rollover of Chinese debt and fresh inflows from the World Bank and Asian Development Bank, the foreign reserves have been declining.

The external debt repayments have continued to put pressure on the country’s foreign currency reserves.

As talks with the International Monetary Fund (IMF) over the ninth review of the loan facility come to a standstill, its external financing strains are increasing. The timely completion of Pakistan's flood recovery plan, according to the IMF, is crucial to support negotiations and ongoing financial support from multilateral and bilateral partners.

The pledged funding from the friendly countries has not been materialised yet. After exports, remittances are the second-largest source of income but are falling.

However, an improvement in the current account balance is expected to support the foreign reserves.

The country’s current account deficit (CAD) narrowed 68 percent year-on-year to $567 million in October. The decline in the deficit was attributed to lower imports.

During July-October FY2023, CAD was $2.8 billion, compared with $5.3 billion in the same period of last year, as imports reduced by $2.7 billion or 11.6 percent to $20.617 billion and exports increased by $0.2 billion or 2.6 percent to $9.825 billion.