Karachi [Pakistan], May 13 (ANI): Trade deficits and increasing current account coupled with dried up dollar inflows, and external debt payments have resulted in an alarming dip in Pakistan’s foreign exchange reserves, plunging to a record low since December 2019.
According to data released by the State Bank of Pakistan (SBP) currency inflows lasted at USD 164 billion in a week from USD 16.5 billion which ended on May 6. The central bank data further revealed that the foreign reserves of Pakistan had a steady decline by USD 178 million and arrived at USD 16.376 billion, reported Geo News.
Further, the SBP reserves plummeted to USD 10.308 billion, a decrease of USD 190 million. External debt repayments had resulted in the rapid descent in the reserves to outflows. As per analysts the reserves which the SBP currently possess can cover imports for about 1.54 months.
The fast depletion of the foreign exchange reserves was the result of Pakistan’s inflation of twin deficits, a lack of foreign currency inflows, and a sharp increase in the foreign debt servicing obligations. Dwindling reserves have put Pakistan’s currency under immense pressure, resulting in a dip of Rs191.77 per dollar in the interbank market, reported Geo News.
Amidst such declining foreign exchange reserves, Pakistan requires quick foreign currency inflows in order to meet debt payments and imports. However, to achieve this, the incumbent government has to cut costly energy subsidies, which were previously introduced by the former Imran Khan government.
Meanwhile, with the delay in the revival of the International Monetary Fund (IMF) programme and falling foreign currency reserves, the Pakistani rupee has hit an all-time low against the US Dollar, crippling the country’s economy further.
Former Finance Minister Hafiz Pasha said, “The only way to steer out of the economic crisis is to talk with IMF as soon as possible otherwise the value of the rupee could depreciate further.”
Inflation in Pakistan entered the double-digit mark in July, the biggest surge in nearly six years. (ANI)