ISLAMABAD, January 6 (PTI) Pakistan’s central bank’s foreign exchange reserves have plummeted to an eight-year low of more than $5.5 billion amid fears of a default, media reported on Friday.
Despite the government’s efforts to boost the economy, foreign exchange reserves are still dwindling.
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State Bank of Pakistan (SBP) reserves hit an eight-year low of $5.576 billion for the week ending December 30, 2022, Dawn reported.
Within a week, the central bank’s foreign exchange reserves outflowed 245 million US dollars to repay foreign debts.
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External debt repayment is the most troubling issue for the PMLN-led coalition government, which faces serious threats of default. According to the newspaper, repeated attempts to restart negotiations with the IMF for the next tranche have so far come to fruition.
The drop in reserves has already depreciated the currency sharply against the dollar and other major currencies. The SBP’s foreign exchange reserves fell by $11 billion to $5.6 billion from $16.6 billion in January 2022, the report said.
This sharp drop has made it impossible for the government to service its foreign debt without borrowing more money from friendly countries. According to Dawn, SBP’s reserves are only sufficient for three weeks of imports.
The country’s foreign exchange reserves totaled US$11.4 billion that week, of which US$5.8 billion was reserved by commercial banks.
The situation is worrisome as foreign banks have been charging high fees for opening letters of credit, while local banks are constrained by the SBP due to a severe shortage of dollars.
The dollar strengthened by 17 paise to close at 227.12 rupees on Thursday, but currency dealers in the interbank market quoted it at 228.10 rupees, SBP reported.
Despite the rapid depletion of SBP reserves, Finance Minister Ishaq Dar is still hoping to turn the situation around with expected financial assistance pledged by friendly countries, but according to Dawn, nothing has been achieved so far.
(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)