According to the State Bank of Pakistan (SBP), Pakistan’s foreign exchange reserves increased to $10.043 billion by the week ending April 28, 2023, up $19 million from the previous week.
However, it is important to note that the country’s foreign exchange reserves have decreased by $17.185 billion since reaching a record high of $27.228 billion on August 27, 2021.
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The SBP’s official reserves also decreased by $6 million to $4.457 billion during the same week. To address the country’s foreign exchange shortage, the government is seeking a $1.2 billion tranche under the Extended Fund Facility (EFF) from the International Monetary Fund (IMF).
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Pakistan has received significant foreign inflows from China, but the government could further boost the economy by providing incentives to export-oriented industries and improving the business climate to attract foreign investment.
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Strengthening the domestic economy could also help reduce reliance on imports and address the trade deficit. Improving tax collection and reducing corruption could increase government revenues, leading to reduced external borrowing.
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 underlying causes of the crisis.
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In conclusion, while the recent increase in foreign exchange reserves is positive, sustained efforts and effective policies are needed to address Pakistan’s balance of payment crisis in the long run.
