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Low inflows push down forex reserves at lowest level of $3 bln

ISLAMABAD (Eshfak Mughal):- The official foreign reserves was decreased by $592 million to $3.086 billion during the last week due to heavy repayments of external loans and debt servicing.

The State Bank of Pakistan issued weekly updates about the country’s foreign reserves as of 27th Jan 2023 on Thursday.

The total liquid foreign reserves held by the country stood at $8.742 billion as of 27-Jan-2023, according to the State Bank of Pakistan. The Central Bank has also present break-up of the foreign reserves position of official and private foreign exchange reserves.

According to the report, foreign exchange reserves held by State Bank reduced by $592 million to $3.086 billion due to external debt repayments. The official forex reserves reached at the lowest level of 10 years which only covers less then three weeks’ import bill.

Pakistan is already living with restricted imports regime due to the lowest official forex reserves since the July 2022. Some estimates indicate that around $5 billion imported cargoes are stuck at Karachi Port due to restricted regime.

The commercial banks have $5.65 billion as of 27th Jan 2023.

The data of the State Bank shows that foreign exchange reserves held by Stat Bank were decreased by $2.5 billion and $6.72 billion during the first half of the current fiscal year. The official foreign exchange reserves decrease by 45 percent during last week and 69 percent during the first seven months of the current fiscal year.

Reduction in foreign exchange of State Bank is mainly due to non-availability of external financing and low inflows of remittances of overseas’ workers and exports receipts during the current fiscal year.

According to the report of Ministry of Economic Affairs Division, the country could only grab $5.6 billion during the first half of the current fiscal year against the total budget estimates of $22.8 billion for the current fiscal year.   

Pakistan has accepted some tough condition of the International Monetary Fund (IMF) for revival of stalled loan program. The negotiation between Pakistan and IMF under 9th Review Meeting is underway in Islamabad. The IMF will issue new tranche of worth one billion dollar to Pakistan.

Pakistan will also grab other resources to get greenback currency including some friend countries and international creditors after the successful conclusion of ongoing talks.

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