ISLAMABAD: Pakistan’s foreign exchange reserves nosedived to the lowest level in nearly a decade as much-needed assistance from global lenders and foreign countries is yet to flow.
The country’s economic situation is worrying as foreign exchange reserves held by the central bank of cash strapped country further dipped $1.2 billion; currently standing at $4.5 billion in wake of payments to two foreign banks.
The South Asian nation paid $600 million to the Emirates NBD Bank and $420 million to Dubai Islamic Bank which directly impacted SBP-held reserves. With the latest development, the import cover of the country has dropped below one month.
The draining reserves will impact importers and will further put basic commodities like crude oil and LNG at the risk besides the country being unable to service the enormous foreign debt.
As the country’s new finance czar, Ishaq Dar continued to ease the masses, ruling out the possibility of default, the actual situation on the ground opposed his rhetoric.
Amid reports, Ishaq Dar spoke with Geo News, trashing reports claiming that the country left with an import cover of only under a month. Dar, a close aide of PML-N supremo, maintained that Pakistan’s reserves currently stood at a total of $10 billion.
Delving into details, he said $4 billion are held by the central bank and $6 billion are held by commercial banks. He also assured to make payments on time, rekindling hope that the foreign exchange reserves will also boost in the coming days.
Pakistan’s forex reserves continued to fall since the beginning of the current fiscal year. The dilapidating economic situation further plunged following the change of government in the center. In April 2022, the reserves stood at above $10 billion double as compared to current levels.
Amid the worrisome situation, Prime Minister Shehbaz Sharif lately holds a telephonic conversation with International Monetary Fund (IMF) chief in another bid to push the Washington-based lender to resume the loan programme, a key source for Islamabad in recent years other than foreign aid that keeps the economy running.
IMF M.D pledged to help the cash-strapped nation amid the difficult period, however, a lot is needed to be done for the completion of IMF programme.
With shrinking forex reserves, the shortage of greenback (USD) also worsens as the nation forecasts its trade deficit to a new record high. Sharif-led government also attempted to raise fuel and electricity prices, a basic pre-requisite demanded by IMF to continue the dialogue.
With increasing economic plights, weekly inflation jumped by nearly 31 percent as compared to last year, as already distressed masses saw hike in the prices of food items.