SBP-held forex reserves drop to $4.2bn
Foreign exchange reserves held by the State Bank of Pakistan fell to $4.2 billion after the cash-strapped country failed to secure external financing despite efforts to restart a stalled bailout program.
In its bulletin, the SBP said its reserves fell by $119 million for the week ended May 19, and currently stand at $4.19 billion. Will provide cover.
Net foreign reserves held by commercial banks stood at $5.53 billion, $1.34 billion more than the central bank, bringing total foreign exchange reserves to $9.7 billion.
This is the fourth weekly decline in foreign exchange reserves, with Pakistan showing no sign of receiving external financing anytime soon amid political instability – which has had a major impact on the deteriorating economy.
The $350 billion economy is in crisis amid financial woes and delays in an agreement with the International Monetary Fund (IMF) that would release much-needed funding to avert the risk of default.
The government has been in talks with the Washington-based lender since late January to resume a $1.1 billion loan tranche on hold since November, which is part of the $6.5 billion Expanded Fund Facility (EFF). But it was agreed in 2019.
The agreement with the IMF will also open up other bilateral and multilateral financing opportunities to increase Pakistan’s foreign exchange reserves.
The ninth review was supposed to take place in November 2022, but the two sides have yet to reach an agreement.
The IMF is insisting that the government needs to secure “significantly higher financing” for a successful bailout review, but local officials insist they have already met the requirements. are
Federal Minister for Finance and Revenue Senator Ishaq Dar said on Wednesday that all technical formalities and preliminaries have been completed but unfortunately the IMF program is facing structural delays.
Dar expressed his confidence that Pakistan will not default and the coalition government is committed to complete the 9th review of the IMF programme.