The State Bank of Pakistan (SBP)’s foreign exchange reserves have declined to $4.34 billion, its lowest value since February 2014, continuing the persistent decline witnessed since the start of last year.
According to data issued by the central bank for the week ending Jan. 6, Pakistan’s forex reserves declined by $1.23 billion, from $5.57 billion to $4.34 billion, largely due to external debt repayments. This amount is barely enough to pay for just three weeks of average imports. The SBP further said net forex reserves held by commercial banks were currently equal to $5.84 billion, leaving total liquid reserves at $10.18 billion.
Despite the rapid deterioration, the government seems unable—or unwilling—to move forward with the International Monetary Fund (IMF), even though both Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar have claimed they are committed to completing the program. The IMF bailout—while a marginal $1.1 billion in the next tranche—is seen as key to reviving the confidence of both other multilateral lenders and entrepreneurs within Pakistan.
Last week, Dar claimed that Pakistan’s foreign exchange reserves would “strengthen” within days as “friendly” nations provide inflows. However, this has yet to materialize. The country is also in the midst of a massive currency crisis, which has severely restricted imports of pretty much every sector, including food and export-oriented raw materials.