Forex reserves drop to nine-year low

Pakistan’s foreign exchange reserves have slipped to the alarming level of less than $3 billion for the first time in nine years, which curtailed the country’s import cover to slightly over two weeks ahead of likely revival of International Monetary Fund’s (IMF) $7 billion loan programme.

The State Bank of Pakistan (SBP), in its weekly update, said that foreign exchange reserves decreased by $170 million to $2,916.7 million due to external debt repayments in the week ended February 3, 2023.

The low reserves have raised the risk of default on repayment of foreign debt.

Finance Minister Ishaq Dar, however, appeared confident about the early revival of IMF programme as 10-day talks were scheduled to conclude on Thursday.

The resumption of the programme will pave the way for release of next tranche of $1.1 billion in a few weeks or about a month and unlock another couple of billions of dollars from other multilateral and bilateral creditors including friendly countries.

It will provide much-needed support for stabilising the foreign exchange reserves.

Published in The Express Tribune, February 10^th, 2023.

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