Pakistan’s foreign exchange reserves have improved to over $10 billion by the week ended April 20, 2023, according to the State Bank of Pakistan (SBP).
The country’s foreign exchange reserves increased by $59 million compared to the previous week, which is a positive sign for the economy. However, it is worth noting that the country’s foreign exchange reserves had declined by $17.204 billion since reaching a record high of $27.228 billion on August 27, 2021.
Despite the decline in foreign exchange reserves, the official reserves of the State Bank of Pakistan rose by $30 million to $4.463 billion during the week ending on April 20, 2023, compared to $4.433 billion in the previous week. 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.
China has been providing significant foreign inflows to Pakistan, which has helped improve its stock of foreign exchange reserves. To further boost its economy, the government could consider 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. 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. In conclusion, the recent increase in Pakistan’s foreign exchange reserves is a positive development, but sustained efforts and effective policies are necessary to address the country’s balance of payment crisis in the long run.