The State Bank of Pakistan (SBP) has reported a 1.8% decline in foreign exchange reserves on a week-on-week basis, with the total now standing at $7.64 billion.
According to data released by the central bank on Thursday, its foreign currency reserves decreased by $140 million and reached $7,638.9 million in the week ending on September 8, 2023, compared to the previous weeks tally of $7,779.3 million.
The SBP attributed the decline in forex reserves to debt repayments. Overall liquid foreign currency reserves of the country, including the reserves held by commercial banks, amounted to $13,079.1 million. Of these, commercial banks had reserves of $5,440.2 million.
Earlier in July 2023, the central banks reserves improved significantly, driven primarily by financial assistance from the International Monetary Fund (IMF) and friendly nations. Under a fresh $3 billion loan program spanning nine months, the IMF provided the first tranche of $1.2 billion, while Saudi Arabia and the United Arab Emirates (UAE) deposited $3 billion in SBPs accounts, bolstering prospects of a swift economic recovery. Debt rollovers by China also lent critical support to Pakistans foreign currency reserves.
However, the reserves fell considerably during August owing to a marked slowdown in remittances sent home by overseas Pakistanis.
Besides, debt repayment obligations were also eating into the reserves. Caretaker Finance Minister Dr. Shamshad Akhtar has acknowledged that Pakistans export earnings and the inflow of remittances have remained subdued in recent times while foreign debt remains very high.
This situation underscores the importance of carefully managing the country’s external financial position and implementing policies to boost exports and remittances while efficiently managing debt repayments to ensure a stable and sustainable economic outlook for Pakistan.
Pakistan’s foreign exchange reserves have experienced a slight dip, primarily due to debt repayments, totaling