KARACHI: The State Bank of Pakistan (SBP)-held foreign exchange reserves have declined slightly as the government faces an uphill task in arranging funds and reviving a stalled bailout programme.
In its weekly bulletin, the central bank said its foreign reserves — as of April 28 — declined by $6 million to $4.46 billion.
The current foreign reserves, according to Arif Habib Limited, provide the country with less than a month’s import cover — a position that has remained the same for the last several months as Pakistan faces an acute balance of payments crisis.
The SBP said that net foreign reserves held by commercial banks stand at $5.59 billion, around $1.13 billion less than SBP’s reserves, taking the country’s total liquid foreign reserves to $10.04 billion.
The country’s foreign exchange reserves have declined to precarious levels since last year as the economic crisis worsened amid a delay in the revival of the $1.1 billion International Monetary Fund (IMF) loan programme.
The government has been in talks with the Washington-based lender since November for the release of the $1.1 billion tranche. The IMF is now preparing to discuss budget plans for the upcoming fiscal year — a step considered to be one of the last hurdles before the lender approves a staff-level agreement.
Meanwhile, the government has imposed import curbs in a bid to reduce dollar outflows, which resulted in the country posting a current account surplus of $654 million in March — the highest since February 2015.
However, several companies across different sectors have partially or completely shut down operations in recent months citing inventory shortages and difficulties in opening letters of credit (LCs) due to the import curbs.
With a low amount of dollars in the reserves, Pakistan’s currency has also been trading in between the Rs283-284 range and is expected to fall further if the situation does not improve.
