Pakistan’s liquid foreign exchange reserves experienced a significant decline, falling by $202 million to $15.994 billion by the week ending April 19, 2019, compared to $16.196 billion just a week prior, according to a statement released by the State Bank of Pakistan (SBP) on Thursday.
The central bank’s official reserves were hit hard, dropping by $219 million to $9.024 billion for the week ended April 19, 2019, in contrast to $9.243 billion reported the previous week. The SBP attributed the decline in its foreign exchange reserves to external debt servicing and other official payments, shedding light on the economic challenges the country is facing.
The SBP, in its announcement, expressed concern over the decrease, emphasizing that external debt obligations and official payments had exerted pressure on the foreign exchange reserves. The central bank is actively managing the country’s economic affairs, and the reduction in reserves could pose challenges in meeting international financial obligations.
While the official reserves faced a downward trend, the foreign exchange reserves held by commercial banks showed a slight increase. The reserves of commercial banks rose by $18 million, reaching $6.97 billion compared to the previous week’s level of $6.952 billion. This uptick in commercial banks’ reserves could be seen as a positive sign, potentially contributing to the overall stability of the country’s foreign exchange position.
Analysts suggest that the decline in the overall foreign exchange reserves highlights the need for the Pakistani government to formulate and implement effective economic policies. Addressing the external debt situation and managing official payments more efficiently are crucial aspects that need attention to stabilize and strengthen the country’s economic position.
The government has been actively seeking financial assistance from various international sources, including the International Monetary Fund (IMF), to address the economic challenges and ensure sustained growth. The reduction in foreign exchange reserves underscores the urgency of implementing measures that would enhance economic stability and reduce dependence on external funding.
Furthermore, experts emphasize the importance of diversifying the country’s revenue streams and promoting exports to bolster foreign exchange reserves. A more robust and diversified economy would provide a cushion against external shocks and help build resilience in the face of economic uncertainties.
As Pakistan grapples with these economic challenges, the State Bank of Pakistan and the government must work collaboratively to formulate and implement policies that address the root causes of the decline in foreign exchange reserves. Proactive measures, coupled with international cooperation, are crucial to navigate through these challenging economic times and lay the groundwork for a more stable and resilient economic future.