Karachi, December 26, 2024 – Pakistan’s net foreign exchange (forex) reserves have witnessed a significant decline of $262 million within a week, according to the State Bank of Pakistan (SBP). The country’s overall forex reserves stood at $16.371 billion as of December 20, 2024, compared to $16.633 billion recorded a week earlier, on December 13, 2024.
The SBP reported that the official forex reserves it holds dropped by $228 million, settling at $11.853 billion by the end of the reporting week, down from $12.081 billion in the prior week. The central bank attributed this decline in forex reserves to external debt repayments made by Pakistan during this period. This underscores the ongoing pressure on the country’s forex resources due to its debt servicing obligations.
Additionally, forex reserves held by commercial banks also experienced a reduction. These reserves fell by $34 million, reaching $4.518 billion as of December 20, 2024, compared to $4.552 billion in the preceding week. This further illustrates the challenges faced by Pakistan in maintaining stable forex levels amidst external financial commitments and market dynamics.
The decline in forex reserves highlights Pakistan’s vulnerability to external shocks and underscores the importance of bolstering the country’s forex inflows through measures such as increased exports, foreign direct investments, and remittances from overseas Pakistanis. The SBP’s ability to manage the forex reserves effectively remains critical to ensuring economic stability and maintaining confidence among international investors and financial institutions.
As the forex reserves dwindle, it raises concerns over the sustainability of the country’s import cover and its ability to meet short-term external obligations. Analysts emphasize the need for proactive policies to enhance forex reserves and reduce dependence on external borrowing. The government’s engagement with international lenders, along with efforts to attract foreign investments, could play a pivotal role in reversing this trend.
In conclusion, Pakistan’s declining forex reserves reflect the economic challenges it continues to face, demanding swift and strategic measures to ensure financial stability and resilience in the global economic landscape.