SBP-held foreign exchange reserves dropped to 9-year low of $4.34 billion
The State Bank of Pakistan’s (SBP) foreign exchange reserves fell to $4.34 billion, its lowest level since February 2014, due to a lack of dollar inflows from the International Monetary Fund (IMF) or friendly nations.
The SBP disclosed on Thursday that due to the repayment of external debt, its reserves fell by $1.23 billion during the week ended January 6.
The country has been experiencing a severe dollar shortage, which is having a negative impact on the capacity to import even food and industrial raw supplies. The country doesn’t have enough dollars, according to the most recent status of foreign exchange reserves, to pay for even one month’s worth of routine imports.
Data showed that commercial banks held $5.84 billion in net foreign currency reserves, while the overall amount of liquid foreign exchange reserves was $10.18 billion.
Ever since the beginning of 2022–2023, reserves have been rapidly decreasing. In the upcoming months, analysts predict rising inflation and limited industrial output as manufacturing is constrained by the scarcity of imported raw materials.
According to Geo, United Arab Emirates (UAE) will roll over the existing loan of $2 billion and give an additional $1 billion loan, which should stabilise the reserve position in the coming days.
As the government strives to reduce imports amid a dollar shortage, the reserves, which fell to their lowest level since February 2014, would now only provide import coverage of 0.82 month.