KARACHI: Foreign exchange reserves held by the central bank continued to spiral downwards for the 11th successive week as they fell 1.26% on a weekly basis, according to data released on Thursday.
The continued drop in the reserves raises concern about Pakistan’s ability to meet its financing requirements as the reserves have fallen well below the $8-billion mark.
Even though the government announced last month that it had managed to secure a financial package of $6 billion from Saudi Arabia, the impact is yet to be seen.
Although the prime minister has returned from his official visit to China, so far there has been no announcement of any assistance from the close ally. Meanwhile, talks between the International Monetary Fund (IMF) and the finance ministry have begun for a possible bailout to help address Pakistan’s economic challenges.
On November 2, the foreign currency reserves held by the State Bank of Pakistan (SBP) were recorded at $7,678.9 million, down $98 million compared with $7,776.9 million in the previous week.
The decrease was attributed to payments on account of external debt servicing.
Overall, liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $14,068.1 million. Net reserves held by banks amounted to $6,389.2 million.
A month ago, China agreed to immediately give a loan of $2 billion to Pakistan, a move meant to arrest the slide in foreign currency reserves and provide much-needed breathing space for the new government.
Earlier, the reserves dipped to $9.06 billion, forcing the central bank to let the rupee depreciate massively for the fourth time since December 2017 and sparking concern about the country’s ability to finance a hefty import bill as well as meet debt obligations in coming months.
In April, the SBP’s reserves increased $593 million due to official inflows. A few months ago, the reserves surged due to official inflows including $622 million from the Asian Development Bank (ADB) and $106 million from the World Bank.
The SBP also received $350 million under the Coalition Support Fund (CSF) earlier.
In January, the SBP made a $500-million loan repayment to the State Administration of Foreign Exchange (SAFE), China.