Pakistan’s foreign exchange reserves have experienced a decline of $218 million, reaching $9.513 billion by the week ended May 26, 2023, according to a statement by the central bank.
This decline follows the previous week’s reserves of $9.731 billion as of May 19, 2023.
The continuous decrease in foreign exchange reserves is primarily attributed to the country’s ongoing external debt repayment obligations over the past few years. The current reserves position highlights the challenges Pakistan faces in maintaining a favorable balance of payments.
It is worth noting that Pakistan’s foreign exchange reserves reached an all-time high of $27.228 billion by the week ended August 27, 2023. However, since then, the country has experienced a significant decline in reserves, amounting to $17.715 billion.
In light of its external obligations, Pakistan is actively seeking ways to raise funds. The government is pursuing the ninth review of its program with the International Monetary Fund (IMF) to secure support for its reserves. The continuation of the IMF program may provide the country with the necessary assistance to make further progress in managing its external repayment obligations.
The official reserves held by the State Bank of Pakistan (SBP) have also witnessed a decline. The reserves decreased by $102 million to $4.091 billion by the week ended May 26, 2023, compared to $4.193 billion the previous week. The SBP attributes this decline to external debt repayment.
Similarly, the foreign exchange reserves held by commercial banks in Pakistan recorded a decline of $116 million, reaching $5.422 billion by the week ended May 26, 2023, compared to $5.538 billion a week earlier.
The decline in foreign exchange reserves underscores the importance of implementing effective strategies to manage external debt and secure additional funding sources to bolster Pakistan’s economic stability and meet its financial obligations.