The State Bank of Pakistan (SBP) Thursday announced that the country’s foreign exchange reserves fell by $55 million to $9.76 billion by the week ending on March 31, 2023.
The latest reserves position has declined as compared to $9.815 billion a week earlier.
READ MORE: Pakistan’s foreign exchange reserves drop to $9.816 billion
The country’s foreign exchange reserves have declined by $17.468 billion since reaching an unprecedented high of $27.228 billion on August 27, 2021.
The official reserves of the State Bank of Pakistan fell by $36 million to $4.208 billion during the week ending on March 31, 2023, compared to $4.244 billion in the previous week.
Despite this decline, the State Bank of Pakistan’s foreign exchange reserves still exceed the level required to provide more than one month’s worth of import cover.
READ MORE: Pakistan’s foreign exchange reserves rise to $10.14 billion
The recorded import bill for March 2023 was $3.828 billion, which ideally should be covered by foreign exchange reserves equivalent to three months’ worth of import payments. However, the central bank’s reserves have fallen below this level.
The government is working to secure a $1.2 billion tranche under the Extended Fund Facility (EFF) from the International Monetary Fund (IMF) to address the country’s shortage of foreign exchange.
Nonetheless, the country has received substantial foreign inflows from China, which has helped to improve its stock of foreign exchange reserves.
READ MORE: Pakistan’s weekly forex reserves move up by $93 million
In addition to the measures already taken, the government could consider further efforts to boost exports, such as providing incentives to export-oriented industries and improving the overall business climate to attract foreign investment.
Strengthening the domestic economy could also help reduce the country’s reliance on imports, which would help address the trade deficit. Improving the tax collection system and reducing corruption could also help increase government revenues, which could be used to repay debts and reduce the need for external borrowing.
READ MORE: SBP’s forex reserves rise more than one month import cover
Overall, Pakistan’s balance of payment crisis is a complex issue that requires sustained efforts and effective policies to address. While short-term measures such as currency devaluation and import restrictions may provide some relief, long-term solutions such as boosting exports and strengthening the domestic economy are necessary to address the root causes of the crisis.
