Pakistan forex reserves fall to less than a month’s import cover

SBP said that its foreign exchange reserves have decreased by $354 million to $4.2 billion as of the week ended March 24

Islamabad: As Pakistan struggles to secure external financing to pull the country out of the economic crisis, foreign exchange reserves held by the State Bank of Pakistan (SBP) reversed their course, snapping their six-week winning streak, media reports said.

In its weekly bulletin, the SBP said that its foreign exchange reserves have decreased by $354 million to $4.2 billion as of the week ended March 24, which will provide an import cover of less than a month, Geo News reported.

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The net forex reserves held by commercial banks stood at $5.6 billion, $1.3 billion more than the SBP, bringing the total liquid foreign exchange reserves of the country to $9.8 billion, the statement said.

Pakistan’s $350 billion economy continues to dwindle amid financial woes as the authorities struggle to strike a staff-level agreement with the International Monetary Fund (IMF).

The Washington-based lender has been in talks with the Pakistani authorities since end-January to resume the $1.1 billion loan tranche held since November last year, part of a $6.5 billion Extended Fund Facility (EFF) agreed upon in 2019.

The IMF funding is critical for Pakistan to unlock other external financing avenues to avert a default on its obligations.

An IMF statement said substantial progress has been made in discussions towards policies in recent days and financial assurances are standard in IMF programmes, Geo News reported.