Forex reserves fall to five-year low of $7.7 billion

KARACHI: Pakistan’s official foreign exchange reserves fell 0.6 percent to nearly five-year low of $7.777 billion, the central bank’s data showed on Thursday, as the Prime Minister Imran Khan departed to China to top up the depleting external account after Saudi bailout commitment last week.

The State Bank of Pakistan (SBP) said its foreign exchange reserves declined $48 million as of 26 October from $7.825 billion a week earlier. The SBP’s forex reserves were teetering around six billion dollars by the end of fiscal year of 2012/13, but they recovered to $9.097 billion till the following year-end on IMF’s loan.

The country’s total foreign exchange reserves decreased 0.7 percent or $111.3 million to $14.184 billion. They stood at $14.295 billion in the previous week.

The reserves of commercial banks stood at $6.407 billion as against $6.470 billion a week earlier, according to the SBP.

Prime Minister left for a five-day visit to China to discuss financial assistance package as the foreign exchange position came down to cover less than two months of imports.

Last week, Saudi Arab pledged six billion dollars to help Pakistan meet its external account challenges. The package includes three billion dollars in immediate balance of payments support and three billion dollars a year on account of oil deferred payment.

Current account deficit widened to $18 billion during the last fiscal year, up 42.5 percent from a year earlier.

The SBP’s reserves declined due to external debt servicing and other official payments. Depleting external account underscored an urgent need of top-ups committed by the Saudi government to avert looming balance of payments crisis.

The government expressed optimism over lenient conditions on a possible International Monetary Fund’s loan program as a result of Saudi rescue and an expected Chinese assistance.

An IMF delegation is expected to reach Pakistan early next week to broach upon a loan program with Pakistan that has resorted to the Washington-based lender 12 times since 1980. The IMF’s three-year extended fund facility of $6.6 billion ended in September 2016.