Karachi, November 16, 2023 – The State Bank of Pakistan (SBP) on Thursday said that the country’s foreign exchange reserves have witnessed a decrease of $78 million due to external debt payments.
The weekly report revealed that the foreign exchange reserves dropped to $12.536 billion by the week ending November 10, 2023, compared to $12.614 billion a week earlier on November 3, 2023.
Pakistan’s foreign exchange holdings have been subject to fluctuations, experiencing a notable decline from their peak of $27.2 billion in August 2021. As of October 27, 2023, the reserves stood at $12.577 billion, making the recent decrease a notable development despite the prior increase.
The official foreign exchange reserves of the State Bank of Pakistan recorded a decline of $114 million, reaching $7.397 billion by the week ending November 10, 2023, compared to the previous week’s level of $7.511 billion. The central bank attributed this reduction in official reserves to external debt payments made by the government.
On the contrary, foreign exchange reserves held by commercial banks showed a gain of $36 million, totaling $5.139 billion by the week ending November 10, 2023, as compared to $5.103 billion a week ago.
The decline in the country’s foreign exchange reserves raises concerns about the balance of payment situation. However, the recent agreement with the International Monetary Fund (IMF) on the first review may alleviate some of these concerns. Under this agreement, Pakistan is expected to receive around $700 million, providing a much-needed buffer to its reserves.
The external debt payments are a crucial aspect of managing the country’s financial obligations, and while it impacts the reserves in the short term, the agreement with the IMF signals a positive development for Pakistan’s economic outlook. The financial support from the IMF is anticipated to contribute to stabilizing the country’s reserves and enhancing its capacity to meet external obligations.
As Pakistan navigates its economic challenges, the central bank and the government’s commitment to managing external debt and engaging in international partnerships, such as with the IMF, will continue to play a vital role in shaping the economic landscape. The infusion of funds from the IMF is expected to provide a much-needed cushion, supporting the country’s efforts to maintain a stable and resilient economy in the face of global economic uncertainties.
