LAHORE: Pakistan’s external debt to exports ratio has declined from 300 percent in Fiscal Year 2010 to 255 percent in Fiscal Year 2015-16, according to State Bank of Pakistan.
Borrowing externally is necessitated by trends in balance of payments in general and trade deficit in particular. With shrinking of the current account deficit and with surplus in capital account, Pakistan’s overall balance of payment position contributed to the build-up of external buffers.
The State Bank of Pakistan’s foreign exchange reserves are now over $15 billion, which are sufficient to cover four months of imports. It is a marked improvement from 2013 when these were only $3.9 billion. Apart from privatization proceeds, spot purchases from the interbank market, rising remittances Pakistani expatriates, Coalition Support Fund, and multilateral and bilateral inflows, have contributed to increase foreign exchange reserves.
