It keeps getting worse for Pakistan’s foreign currency reserves as they have hit a new low. Bloomberg reports that Pakistan is using its dollar reserves at the fastest pace among all countries in Asia.
At this pace, Pakistan’s reserves might soon drop below Cambodia, a sovereign state whose economy is ten times smaller than that of Pakistan.
Pakistan vs Asia
According to data from International Monetary Fund (IMF), Pakistan’s reserves are depleting at a faster rate than any other country in Asia. Cambodia’s dollar reserves increased to $11.2 billion in January while Pakistan’s dropped by 21.6% to touch $13.5 billion over the year.
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Even Bangladesh has a stronger economy than Pakistan at the moment. Bangladesh’s foreign reserves are double than that of Pakistan with more exports as well. In Asia Pacific region, New Zealand and Kazakhstan beat Pakistan in terms of more foreign reserves as well, despite being smaller economies.
Here is how Pakistan compares with some other countries.
Continuously Decreasing
The primary reason behind depletion of foreign reserves is the ever-increasing trade deficit. Despite tough import regulations, Pakistan has failed to curb imports which has led to an unbalanced economy. Pakistan’s economy is growing at a rate of 5% due to CPEC and other foreign investments, however, Pakistan has failed to build up its foreign reserves. According to Insight Securities, the reserves are projected to fall by an amount of $2.2 billion by June 2018.
The dollar hit an all-time high value against rupee as Pakistani currency was devalued twice in the last four months. The imports will still remain the same as for instance most of the automobile companies have to import parts even for the locally assembled vehicles. The rates, however, will surely go up as major companies like Toyota, Suzuki, and Honda have already jacked up their prices.
The conditions are expected to go even worse as the experts are forecasting a further decrease in reserves in the upcoming months.
The government recently borrowed $2.5 billion but the reserves have failed to grow. Authorities are planning to introduce a tax amnesty scheme in the upcoming month which is projected to bring in $4-5 billion. That move might prove helpful in accumulating the foreign currency reserves of Pakistan.
Jamhooriyat
Cambodia doesn’t have nukes or terrorists. Pakistan has nukes and terrorists so we can continue to extort dollars from the West. There is no need for us to reform our economy when the West continues to lend us dollars. We will be going for a new IMF programme within months.
You do not look to be from “We” at the first place.
When Pakistan is importing heavily for CPEC, power projects how can the trade balance
of import & export be maintained ?
Besides that writer has ignored the fact that exports of Pakistan have increased over the years but this all scenario is created due to imports only which also has its reasons mentioned above.
I’m writing from Karachi. Right now the weather is really hot here. It’s zuhar time so the mosques are blaring the azaan. The streets are littered with garbage because somebody had the bright idea to place large yellow garbage bins by the roadside and these are now overflowing. There is no door to door garbage collection service by the government here. We have to pay private businesses to do that for us. Afghan refugees mostly.
Is this sufficient local information to convince you I’m Pakistani? I know you guys think there are indians lurking around every corner of the web. But even the Pakistan watchers across the border don’t have this much mundane on the ground information.
why do we reserve money should be in circle according to economics -?????
Pakistan being a poorer country than India has got higher minimum wages and on top of that parliamentarians, ministers and court judges are given hundereds of thousands of rupees per month salaries and then they are corrupt too. Our armed forces are given too many facilities including plots when officers retire. I have never seen in developed countries that army officers are given plots in societies on retirement. Then our export is nothing compared to import because gas and electricity are expensive and it is difficult to start new factories since every govt official wants to take his cut. So what do you expect after all this?
But don’t panic.. coz ur Islamic terrorists reserve is increasing at fastest rate than any muslim country in the world.