KARACHI: Foreign exchange reserves of the State Bank of Pakistan (SBP) have declined to $3 billion, which is the lowest level since 2001.
According to data released by the central bank, foreign exchange reserves have reduced by $558 million to $8.238 billion, while the foreign exchange reserves held by the central bank shrank by $417 million to $3.046 billion during the week ended on November 29 as compared to $3.2 billion in November 2001.
The forex reserves are sharply depleting despite the fact that the country had signed an extended fund facility (EFF) programme worth $6.68 billion with International Monetary Fund (IMF) in September this year. The IMF programme has apparently failed to boost the market confidence and reserves have tumbled to twelve-year low level. The reserves reduced by $558 million in one week period mainly due to the repayment to IMF in last week of November 2013.
The economists are of the view that the country is inching closer to the balance of payments crisis but the government is not taking concrete measures to stem the outflow of foreign exchange reserves. They said the government may find itself without enough foreign currency to meet its debts, eventually leading to more difficult economic situation.
It is worth mentioning here that Pakistan’s foreign exchange reserves had been on the decline since July 2011 when reserves stood at $14.8 billion. Pakistan had lost $12.0 billion reserves in just 29 months by the end of November 2013. The main reasons behind declining foreign exchange reserves of the country are declining foreign inflows and rising debt repayments in last two and half years. Pakistan had lost $2.2 billion reserves in just four months (since July 2013) and $1.7 billion since signing the IMF programme. Now Pakistan will have to repay $300 million in ongoing month and another $1.2 during Jan-June period.