Karachi: State Bank of Pakistan (SBP)-held foreign exchange reserves fell below $ 3 billion to nine-year low as cash-strapped nation faces hurdles in shoring up its economy amid stalled International Monetary Fund (IMF) programme.

Coalition government is desperately trying to unlock IMF deal, with lender’s mission in Islamabad to negotiate terms for resuming Extended Fund Facility (EFF), which will pave for Pakistan to get more than $ 1 billion from institution.

In statement, central bank said as of week ended February 3, its foreign exchange reserves slipped to $ 2,916.7 million after fall of $ 170 million due to external debt payments. Net forex reserves held by commercial banks stand at $ 5,622.9 million, $ 2.745 billion more than SBP, bringing total liquid foreign reserves of country to $ 8,539.6 million, statement mentioned.

Government and SBP were banking on friendly countries, including Saudi Arabia to help boost reserves; however, none of nations has so far delivered on its commitment leaving Pakistan in critical position.

As result of depleting foreign exchange reserves, imports have been hit hard as commercial banks are reluctant in opening letters of credit making it next to impossible for businesses to stay afloat.

Major automobile makers Atlas Honda and Pak Suzuki Motors Company have repeatedly stopped their car production due to an inventory crunch that’s been created due to liquidity crunch.

Rupee has fallen to historic lows as market faces scarcity of dollars and grey market is persistently active, but local currency has gained some ground versus dollar during last two trading days as market is hopeful of revival of IMF deal Thursday. In this regard, Finance Minister Ishaq Dar said earlier today that talks with multilateral lender were “On track” and government would share “Good news” on matter.

Published in The Daily National Courier, February, 10 2023

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