Forex: Reserves drop to $13.58 billion
Higher exports and record remittances have also supported Pakistan’s reserves.
KARACHI:
Foreign exchange reserves dropped to $13.58 billion in the week ending November 23 from $13.81 billion the previous week, the central bank said on Thursday. Reserves held by the State Bank of Pakistan (SBP) fell to $8.86 billion from $9.12 billion a week earlier, while those held by commercial banks rose to $4.72 billion from $4.69 billion. Foreign exchange reserves hit a record $18.31 billion in July 2012. Higher exports and record remittances have also supported Pakistan’s reserves. Remittances from Pakistanis abroad rose 9.16% to $3.6 billion in the first quarter, July to September, of the 2012-13 fiscal year, compared with $3.297 billion in the same period last year. Pakistan’s reserves have been drained by debt repayments on a $7 billion International Monetary Fund loan.
Published in The Express Tribune, November 30th, 2012.
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Getting a loan to pay off a loan is stupid economics. No one has to go to Berkley to learn that. This is the sorry state of our hierarchy, individuals with top notch degrees make the same pitfalls as the fools of fortune. No one is bold enough to cross the line to do something different and better.
The spike in July was on account of a onetime payment of $1.2 billion of coalition support funds to settle 18 months of 'coalition support'. Subsequently it looks like in 4 months the reserves have dipped by $4.8 billion or around $1.2 billion per month on an average. Here too the operative reserves are the ones with the Reserve bank which is precarious once it goes below $10 billion as per IMF http://tribune.com.pk/story/473100/imf-says-forex-reserves-below-adequate-levels/ Pakistan is headed to a balance of payment crisis unless it can swing yet another IMF loan.