Karachi, June 8, 2023: The State Bank of Pakistan’s (SBP) official foreign exchange reserves have dipped below the level of one-month import cover, according to data released on Thursday.
The official foreign exchange reserves declined by $179 million to $3.912 billion by the week ending June 2, 2023, compared to $4.091 billion the previous week (May 26, 2023).
The country’s import bill for May 2023 amounted to $4.275 billion, as reported by the Pakistan Bureau of Statistics (PBS). According to international standards, a central bank is expected to maintain foreign exchange reserves equivalent to at least three months’ worth of import cover.
The import bill for May 2023 witnessed a significant increase of 43 percent compared to $3 billion in April 2023. This surge was mainly attributed to the government’s decision to lift restrictions on opening Letters of Credit (LCs) for import payments.
Pakistan is currently grappling with a shortage of dollars due to substantial international repayment obligations. Moreover, the delay in the loan program under the International Monetary Fund (IMF) has further compounded the situation.
The government has been striving to reinstate the IMF’s Extended Fund Facility (EFF) program to secure approximately one billion dollars. However, experts believe that the program has nearly concluded, as the deadline for the program is in the current month.
The SBP attributed the decline in foreign exchange reserves to external repayments. The country’s total reserves also experienced a decrease of $178 million, reaching $9.335 billion by the week ending June 2, 2023, compared to $9.513 billion the previous week.
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