Foreign exchange reserves held by the State Bank of Pakistan (SBP) came under severe pressure, falling 4.43% on a weekly basis, according to data released by the central bank on Thursday.
The fall sparks concern over Pakistan’s ability to meet future payment obligations and manage a bulging current account deficit.
On May 18, foreign currency reserves held by the central bank were recorded at $10,320.2 million, down $478.7 million or 4.43% compared to $10,798.9 million in the previous week.
The decline in reserves was attributed to payments on account of external debt servicing. Overall, liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $16,652.2 million. Net reserves held by banks amounted to $6,332 million.
A few months ago, foreign currency reserves surged due to official inflows, including $622 million from the Asian Development Bank (ADB) and $106 million from the World Bank. Pakistan’s reserves plummeted over 43% from a record high of $18.14 billion at the end of June 2016, according to SBP. The reserves touched the peak after Pakistan borrowed $6.6 billion from the International Monetary Fund (IMF) under a 36-month Extended Fund Facility that ended in September 2016.
Published in Daily Times, May 25th 2018.
