KARACHI: Pakistan’s official foreign exchange reserves have declined significantly, now covering only one and a half months of import payments, as per data released by the State Bank of Pakistan (SBP) on Thursday.
The official foreign exchange reserves of the SBP dropped by $134 million, reaching $7.826 billion by the week ending November 18, 2022, compared to $7.96 billion recorded a week earlier. This decline raises concerns about Pakistan’s ability to meet its import obligations amid external financial pressures.
According to the Pakistan Bureau of Statistics (PBS), the country’s import bill stood at $4.71 billion in October 2022. Given the current pace of import expenditures, the existing foreign exchange reserves are now only sufficient to cover 1.66 months of import payments, reflecting growing economic vulnerabilities.
The SBP attributed the continued decline in reserves to repayments against external debt, further straining the country’s ability to finance crucial imports. The dwindling reserves highlight the urgent need for inflows from international financial institutions or other external funding sources to stabilize Pakistan’s import requirements.
Pakistan’s foreign exchange reserves had reached a record high of $20.146 billion by the week ending August 27, 2021. However, since then, the SBP’s official reserves have plummeted by $12.32 billion, exacerbating challenges in financing the country’s essential imports.
Notably, the SBP’s reserves had witnessed a temporary increase a week earlier following the release of $1.5 billion in funds from the Asian Development Bank (ADB) on October 26, 2022. However, this relief proved short-lived as repayment obligations continued to weigh on reserves.
The country’s total foreign exchange reserves declined by $151 million, settling at $13.645 billion by the week ending November 18, 2022, down from $13.796 billion a week prior. The overall foreign exchange reserves had reached an all-time high of $27.228 billion on August 27, 2021, but have since declined by $13.583 billion.
Additionally, foreign exchange reserves held by commercial banks also witnessed a slight dip, falling by $17 million to $5.819 billion by the week ending November 18, 2022, from $5.836 billion a week earlier. This persistent decline in reserves underscores the growing strain on the country’s economy, particularly in financing critical import requirements.
