As the country struggles to repay the International Monetary Fund (IMF) debt and experiences significant economic turmoil, the State Bank of Pakistan’s (SBP) foreign exchange reserves have fallen to a very low level.
The central bank reported that due to foreign debt payments, its reserves decreased by $592 million to $3,086.2 million for the week ending on January 27, reaching their lowest level since February 2014 and barely covering imports for 18.5 days (0.61 months).
According to a statement from the central bank, commercial banks currently hold $5,655.5 million in reserves, bringing the total amount of reserves held by the nation to $8,741.7 million.
Despite declining reserves, the federal government is making sure it fulfils its foreign debt obligations to prevent default—a threat that has been for a while and has finally compelled the Shehbaz Sharif-led administration to comply with IMF requirements.
The government removed the dollar cap, which was a requirement of the IMF, which contributed to the liquidity crisis, and the Pakistani rupee dropped to a record low of Rs271.35 in the interbank market.
The prices of commodities have increased as a result of the reserves falling to new lows every week and the government’s attempts to survive by acquiescing to IMF demands.
The News quoted development analyst Maha Rahman as saying that Islamabad needed the Washington-based lender’s bailout package badly because more funding was dependent on the IMF’s approval.
The minimal reserves and Pakistan’s overall monthly import bill put the country in a hazardous position, the analyst said.
“Please keep in mind that the import bill is currently conservatively priced given the payment challenges and limitations. A reasonable estimate is therefore unsettling “Added she.
According to data provided by the Pakistan Bureau of Statistics (PBS) on Wednesday, consumer prices increased by 27.6% in comparison to 13% in the corresponding month previous year. Since May 1975, when the median inflation rate was 27.77%, this is the greatest year-over-year inflation rate.
Before the conclusion of the fiscal year in June, according to SBP Governor Jamil Ahmed, the nation owed $ 33 billion in loans and other international payments.
Loaning nations have rolled over $4 billion as part of a diplomatic effort, leaving $8.3 billion on the bargaining table.
