Pakistan’s foreign exchange reserves have increased by over $400 million to $9.965 billion by the week ended April 14, 2023, according to the State Bank of Pakistan (SBP) on Thursday.
The country’s foreign exchange reserves had stood at $9.564 billion a week ago, on April 7, 2023.
Although the country’s foreign exchange reserves had declined by $17.263 billion since reaching a record high of $27.228 billion on August 27, 2021, the official reserves of the State Bank of Pakistan rose by $395 million to $4.433 billion during the week ending on April 14, 2023, compared to $4.038 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. However, the country has received significant foreign inflows from China, 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.