ISLAMABAD: The foreign exchange reserves with Pakistan’s central bank plummeted to $5.8 billion in December, according to official figures released on Thursday, providing an import cover of only a month to the country.
Pakistan has been facing a severe balance of payment crisis amid dwindling forex reserves and currency depreciation, raising suspicion the country may default on its international financial obligations.
Finance Minister Ishaq Dar recently acknowledged that Pakistan’s economy was in a “tight situation,” though he said things were still under control.
The State Bank of Pakistan (SBP) announced in an official notification on Thursday the country’s overall reserves stood at $11.7 billion.
“During the week ended on 23-Dec-2022, SBP’s reserves decreased by $ 294 million to $ 5,821.9 million due to external debt repayment,” it said.
The notification revealed the commercial banks in the country were in possession of greater foreign currency than the central bank which amounted to $5.9 billion.
According to Arif Habib Limited, an independent research firm, the SBP reserves were at their lowest since April 2014 and provided an import cover of nearly a month to the country.
Analysts believe Pakistan desperately needs external financing under the circumstances.
While the country has been working with the International Monetary Fund (IMF) to secure another tranche under a $7 billion bailout package, however, officials in Islamabad remain reluctant to implement harsh conditions imposed by the global lender which has delayed the completion of the ninth performance review under the facility.
