Falling reserves

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FOREIGN exchange reserves held by State Bank of Pa-kistan have dwindled down to only $4.5b after repayment of loans to the UAE banks, posing a serious challenge for the country in financing imports.

Servicing foreign debt and paying for imports of raw material and commodities such as medicine, food and energy are among the major concerns.

Thousands of shipping containers are held up at Karachi Port because banks have been unable to guarantee foreign exchange payments.

Regardless of this grim situation, Finance Minister Ishaq Dar appears to be very optimistic to steer the country successfully out of current crisis.

In an interview on Saturday with a private television channel, he was confident that country’s foreign exchange reserves would strength in coming days.

His optimism is definitely banking on inflows that are expected from some friendly countries including China and Saudi Arabia.

The Finance Minister said that a delegation of IMF would soon visit Pakistan to take up and finalise the ninth review.

These indeed are positive developments, which should save the markets from further jitters.

Saving the currency from further devaluation is also important to keep prices further soaring up which have already gone beyond the reach of common man.

While support from friendly countries as well as successful IMF’s ninth review will definitely push away the threat of default for the time being but it will continue to loom over as country has to repay approximately $8.3b in the shape of external debt servicing over next three months.

A serious course correction is need of the hour to get out of this debt trap.

While selling the LNG plants to a friendly country will definitely shore up our foreign exchange reserves, we have to strengthen industries, agriculture and IT sectors in the medium to long term besides ensuring that dollar inflows further increase through remittances which have reduced significantly in recent months to take the country towards self reliance.

The expatriates have always proven to be an asset for the country and at these crucial times, they must be approached and encouraged to send their remittances through legal channels.

They must also be fully facilitated to make investments to uplift productive sectors of economy, which will increase our exports.

Decisions taken at a recent meeting of National Security Committee vis-à-vis checking the smuggling of greenback must be implemented in letter and in spirit by further strengthening border security measures.