Despite financial support from IMF, Saudi Arabia, and UAE, the State Bank of Pakistan reported a dip in Pakistan’s forex reserves, reaching a new low of $7.180 billion. Amid these challenges, the aim is to keep the fiscal deficit manageable.
Friday, November 24th – Due to the ongoing debt repayments and challenges with the external financial market, Pakistan’s foreign exchange reserve has experienced a significant dip. As per the State Bank of Pakistan (SBP) recent report, the reserves have plummeted by $217 million and reached an all-time low of $7.180 billion.
Despite earlier financial support, including a $3 billion IMF stand-by arrangement received in July and aid from Saudi Arabia and the UAE, the total national reserves, including commercial banks’ holdings, have decreased by $233 million, settling at $12.302 billion. Commercial banks’ reserves dropped by $17 million to $5.122 billion.
The decline in reserves is linked to increased import payments and a shortage of fresh inflows, compelling Pakistan to reassess its future investment strategies under economic pressures. The country is simultaneously grappling with an expanding current account deficit fueled by elevated import volumes in October.
However, there is optimism for financial relief on the horizon for Islamabad. Following a positive initial review, the IMF executive board is anticipated to approve a crucial portion worth $700 million under its stand-by arrangement in early December.
This potential funding boost of nearly $1.2 billion is expected from international financial institutions such as the World Bank and Asian Development Bank before the new year. Additional monetary assistance from Gulf partners is also on the horizon.
Despite the challenges in the current account, experts assert that fiscal deficits should remain within manageable limits due to the anticipated inflow of foreign funds and continued support from the IMF.