KARACHI: The State Bank of Pakistan’s (SBP) foreign exchange reserves have been declining for three weeks in a row as the government attempts to reach an agreement with the International Monetary Fund (IMF).
As of May 12, the central bank reported that the payment of external debt had reduced foreign exchange reserves by $72 million to $4.31 billion, which would be insufficient to cover less than a month’s worth of imports.
The government now has $9.93 billion in total liquid foreign reserves, $5.62 billion of which are held by commercial banks, $1.01 billion more than the central bank.
Due to financial difficulties and a delay in reaching an agreement with the International Monetary Fund (IMF), which would release much-needed cash essential to avert default risk, Pakistan’s economy is in disarray.
Earlier on May 11, the State Bank of Pakistan’s (SBP) foreign exchange reserves fell by $74 million to $4.38 billion in a week.
According to information, commercial banks have net foreign reserves worth $5.6 billion.
It was previously stated that despite guarantees from friendly nations concerning external funding to Pakistan, the International Monetary Fund (IMF) still lacked faith in Islamabad and demanded that it “do more” to unlock the loan program.
Sources claim that Pakistan has been requested to provide an IMF repayment plan for a loan of $3.7 billion in June and that it must also show stronger backing from allies in order to fulfill the pledge.
A plan to exchange reserves equal to two months’ worth of revenues, or between $11 and $12 billion, has apparently been rejected by the IMF.
According to sources in the Ministry of Finance, the government raised Rs. 170 billion in taxes through the mini-budget in an effort to get a staff-level agreement with the IMF before its original February 9 deadline.