Foreign reserves held by the State Bank of Pakistan (SBP) witnessed a substantial outflow of $294 million in the week that ended on 23 December 2022.
The central bank’s weekly report released on Thursday revealed that the country’s total liquid foreign exchange reserves went down by $293 million (-2.4 percent) on 23 December 2022, to $11.7 billion, compared to $12 billion in the previous week. SBP’s reserves fell by $294 million (-4.8 percent) to $5.8 billion during the week under review, the lowest level since April 2014, compared to $6.11 billion.
Meanwhile, the net foreign reserves held by the commercial banks stood at $5.88 billion, depicting an increase of $1 million on a weekly basis.
Total liquid foreign #reserves held by the country stood at US$ 11.71 billion as of December 23, 2022. For details https://t.co/WpSgomnKT3 pic.twitter.com/cVUHF6ZBg9
— SBP (@StateBank_Pak) December 29, 2022
The decline in foreign exchange is attributed to the payment against debt servicing to various lenders and the impact of US Dollar smuggling from Pakistan into Afghanistan.
Finance Minister Ishaq Dar said on Wednesday that there was no chance Pakistan would default any time soon while admitting that recent problems have put it in a position it does not deserve to be in.
“How will there be a default? There is no chance that Pakistan will default,” Dar reiterated. He acknowledged that the country is in a difficult situation, but he believes it will “survive” as long as things are managed properly. He added that he is not to blame for the country’s reserves not being $24 billion as they were in 2016. “It’s not my fault. The flaw is in the system, and we must ensure Pakistan’s progress, “Dar stated.
The declining forex reserves, which stood at nearly $18 billion at the start of 2022 highlight Pakistan’s urgent need for external financing, possibly through bilateral lending partners or – the expected choice – the International Monetary Fund.
