Foreign exchange reserves held by the State Bank of Pakistan (SBP) fell to $4.2 billion as the cash-strapped country failed to get international finance despite attempts to restart a delayed rescue plan.
The SBP reported in its bulletin that its reserves, which as of the week ending May 19 stood at $4.19 billion, had decreased by $119 million as a result of external loan repayments. Arif Habib Limited stated that the reserves would fund imports for less than a month.
Commercial banks currently have $5.54 billion in net foreign reserves, $1.34 billion more than the central bank, bringing the total amount of liquid foreign currency reserves to $9.7 billion.
The foreign exchange reserves have decreased for the fourth consecutive week, and Pakistan is not showing any evidence that it will soon be able to secure external financing due to political unrest, which is having a significant negative impact on the economy.
Due to financial difficulties and a delay in reaching an agreement with the International Monetary Fund (IMF), which would release much-needed cash essential to averting the possibility of default, the $350 billion economy is in disarray.
The government and the Washington-based lender have been in discussions to restart the $1.1 billion loan tranche that has been suspended since November. This loan tranche is a component of the $6.5 billion Extended Fund Facility (EFF) that was agreed upon in 2019.
Pakistan’s agreement with the IMF will also open up other bilateral and multilateral financial channels.
Although the two parties have yet to come to an agreement, the ninth review was scheduled for November 2022.
The IMF has insisted that “significantly more financing” must be obtained by the government in order for the bailout review to be effective, but the local authorities are adamant that they have already done so.
Ishaq Dar, the federal minister of finance and revenue, stated on Wednesday that all technical requirements and prerequisites had been met but that the IMF project was, regrettably, experiencing structural delays.
Dar stated that he thought Pakistan would not go into default and that the coalition government was dedicated to finishing the 9th Review of the IMF plan.
