Pakistan forex reserves fall to near 3-year low

As of August 5 (from $8.385 billion the week prior), the State Bank of Pakistan's (SBP) foreign currency reserves hit their lowest level in almost three years due to debt payments.

According to The News, rising debt payments and a lack of external financing caused the State Bank of Pakistan's foreign reserve holdings to fall by $555 million, or 6.6%, over the course of one week.

Data from the central bank indicated that reserve holdings had dropped to their lowest level since October of this year. In 2018, Pakistan's total liquid foreign reserves dropped by $648 million, or 4.6%, to $13.561 billion, while commercial bank reserves fell by $90 million, or 1.6%, to $5.730 billion.


The SBP has just enough reserves to cover imports for slightly more than a month. According to the SBP's announcement, the decrease in the reverse was caused by the repayment of foreign debt.

"Debt repayments are expected to moderate during the next three weeks of this month," the central bank said. "In fact, around three-fourth of debt servicing for the month of August was concentrated during the first week."

Foreign exchange reserves are rapidly declining as a result of the IMF's failure to release funds under a $6 billion scheme, according to The News.

Experts believe that the country's diminishing foreign reserves will be bolstered by the resumption of the IMF programme and the anticipated reduction of the current account deficit as a result of falling imports.