By Staff Reporter
KARACHI: Pakistan’s foreign currency reserves are falling fast despite the government’s tightening of access to dollars, hitting the lowest level since mid-2014 during the week ended on December 30, 2022, as the country struggles to meet external financing needs.
The central bank reserves fell by $245 million to $5.576 billion. The drop means the country barely has three weeks of import cover, even as it battles decades of high inflation and scrambles to secure International Monetary Fund (IMF) funds.
The low levels have raised a red flag as the country looks for additional multibillion-dollar financial support packages from friendly countries to shore them up. Pakistan is in dire need of funds to cover its current account deficit and debt obligations, for which it needs more than $30 billion in external financing this financial year.
The country is seeking an additional $4.2 billion from Saudi Arabia, which includes a $1.2 billion oil loan facility. The Kingdom, China, and the United Arab Emirates have already parked funds in Pakistan’s central bank to help Islamabad.
There has been growing uncertainty about the ability of Pakistan to meet external financing obligations with the country in the midst of an economic crisis and recovering from devastating floods that killed over 1,700 people.
The country’s total foreign exchange reserves during the week were $11.4 billion including $5.8 billion from commercial banks.
“Despite various restrictions on buying foreign currency… growing uncertainty has unleashed a new round of falling reserves,” said a currency dealer, adding the “alarming levels” could prompt more tightening.
The country is currently in an IMF bailout programme, which it entered in 2019, but a firm date for the ninth review to release the much-needed tranche is pending since September 2022 even as it battles a full-blown economic crisis, with decades-high inflation and ballooning current account deficit.
Remittances and exports, two main components of dollar inflows in the country fell sharply in recent months on a slowdown in the global economy.
Inflows from overseas Pakistanis through Roshan Digital Account (RDA) fell to 2 years low of $140 million in December, the central bank’s latest data showed.
Since the launch of the incentive account in September 2020, the country received a total of $5.6 billion in inflows. During the period, the amount invested through Naya Pakistan Certificates (NPCs) was $3.5 billion.
Copyright © 2021 Independent Pakistan | All rights reserved
