Karachi: In alarming news, Pakistan’s forex reserves have dropped to the lowest level in eight years after declining by $294 million, the State Bank of Pakistan (SBP) reported on Thursday.
According to the weekly reminder on the statistics of Pakistan’s reserves, the total SBP-held reserves fell by $294.3 million to reach $5.821 billion — the lowest level of forex reserves since April 2014.
— SBP (@StateBank_Pak) December 29, 2022
This contributes to the worrisome situation the country finds itself in, as the reserves are not enough to service its huge foreign debt.
Despite repeated assurances from Finance Minister Ishaq Dar that the country will not default, the ground realities hardly support his claims.
Contrary to the massive fall in the SBP-held reserves, the net reserves held by the commercial banks went up by $1.4 million, taking the total amount of reserves held by them to $5.885 billion.
Cumulatively, the total foreign exchange reserves witnessed a fall of $293 million to reach $11.7 billion during the period under review.
Pakistan’s current account deficit shrinks 57% YoY in Jul-Nov
It is important to note that during the first five months of the current fiscal year, there has been a constant decline in the current account deficit of Pakistan, which is a welcoming sign for the depleting reserves.
According to the SBP, Pakistan’s current account deficit (CAD)has shrunk by 57% on a year-on-year basis during the first five months of the current fiscal year.
Fall in remittances inflows
However, a trend of sharp decline has also been observed in the inflows of remittances during the first five months of FY23 compared to the same period last year, as inflows amounted to $12 billion this year compared to $13.3 billion recorded last year.