Karachi, November 23, 2023 – The State Bank of Pakistan (SBP) has reported a decline of $217 million in its weekly foreign exchange reserves, attributing the decrease to the country’s external debt payments.
As of the week ended November 17, 2023, the official reserves of the SBP stand at $7.18 billion, marking a notable drop from $7.397 billion reported just a week earlier on November 10, 2023.
This dip in reserves is part of a larger trend, with the country’s total foreign exchange reserves witnessing a decrease of $234 million, settling at $12.302 billion by the week ending November 10, 2023, in comparison to the preceding week’s level of $12.536 billion.
The decline in reserves, particularly the significant drop in SBP’s holdings, is primarily attributed to external debt payments. Pakistan has been grappling with economic challenges, and these outflows have put pressure on the nation’s foreign exchange reserves. The situation is being closely monitored by financial experts and policymakers.
Despite the current decrease, there is optimism regarding the potential replenishment of reserves in the near future. The International Monetary Fund (IMF) is expected to play a crucial role in this regard. The approval of the second tranche of $700 million by the IMF board, anticipated in the coming days, could provide a much-needed boost to Pakistan’s foreign exchange reserves. This injection of funds from the IMF would help stabilize the economic outlook and alleviate some of the pressure caused by external debt obligations.
It’s worth noting that the foreign exchange reserves held by commercial banks have also experienced a decline. As of the week ending November 17, 2023, these reserves dropped by $17 million to reach $5.122 billion, down from $5.139 billion reported a week earlier.
The decrease in commercial banks’ reserves adds another layer to the economic challenges faced by Pakistan. Commercial banks play a crucial role in supporting the overall financial stability of the country, and any reduction in their foreign exchange holdings may impact their ability to facilitate international transactions and contribute to the broader economic development.
The coming weeks will be critical for Pakistan’s economic landscape as stakeholders await the decision on the IMF’s second tranche. The approval of this tranche would not only bolster the foreign exchange reserves but also instill confidence in investors and financial markets. The government and the SBP are actively engaged in managing the economic situation and are expected to take necessary measures to ensure stability and sustained growth.
While the recent dip in foreign exchange reserves raises concerns, the potential inflow from the IMF offers a ray of hope for Pakistan’s economic recovery. The nation’s resilience and proactive measures will be key in navigating through these challenging times and laying the foundation for a more robust and sustainable economic future.
