PkRevenue.com — Pakistan’s foreign exchange reserves witnessed a decline of $99 million during the week ending May 31, 2024, according to a statement released by the State Bank of Pakistan (SBP) on Thursday.
This reduction has brought the nation’s total reserves down to $14.216 billion, from $14.315 billion the previous week.
The drop in reserves primarily stems from a significant decrease in the foreign exchange held by commercial banks. The reserves held by these banks fell by $115 million, sliding to $5.106 billion as of May 31, 2024, compared to $5.221 billion on May 24, 2024. This decline suggests a cautious approach by commercial banks amidst economic uncertainties and external financial pressures.
Contrarily, the official reserves maintained by the SBP experienced a slight uptick. The central bank’s reserves increased by $16 million, reaching $9.11 billion by the end of May, up from $9.094 billion the previous week. This marginal increase indicates a stabilizing effort by the central bank to cushion the overall reserves amidst fluctuating market conditions.
The overall decrease in foreign exchange reserves highlights ongoing economic challenges for Pakistan. The country has been grappling with external debt repayments, fluctuating global oil prices, and pressures on its current account deficit. The slight rise in SBP reserves suggests efforts to manage these pressures, but the decline in commercial bank reserves indicates continued volatility and potential liquidity concerns within the banking sector.
Economic analysts suggest that Pakistan must adopt stringent fiscal policies and attract more foreign investments to bolster its reserves. The government is also urged to expedite structural reforms to enhance economic stability and growth. The International Monetary Fund (IMF) has recommended measures to strengthen Pakistan’s economic framework, including improved tax collection and reduction of subsidies, to ensure sustainable economic health.
The coming weeks will be critical as Pakistan navigates these financial pressures. The central bank’s strategic maneuvers and the government’s policy responses will play a crucial role in determining the country’s economic trajectory and the stability of its foreign exchange reserves.
