The foreign exchange reserves held by the central bank declined 2.9 percent on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday. The reserves of the central bank have fallen by over one billion dollars during the last four weeks mainly due to external debt servicing.
On October 9, the foreign currency reserves held by the SBP were recorded at $11,798.4 million, compared to $12,154.7 million in the previous week.
The SBP’s reserves have been declining since September due to scheduled foreign debt payments. Even though SBP has received some inflows from multilateral and bilateral agencies during the last few weeks, these inflows were less compared to the outflows.
During the previous week ended October 9, SBP made external debt repayment of $507 million and after accounting for inflows, SBP reserves decreased by $356 million to $11.798 billion. Collectively, SBP’s reserves fell sharply over one billion in the last four weeks to reach below $11 billion.
However, SBP data showed that reserves held by commercial banks increased slightly by $78.5 million during the last month. Commercial banks’ reserves surged to $7.217 billion as of October 9, up from $7.138 billion as of September 11. The country’s total liquid foreign exchange reserves fell by $994 million to $19.016 billion.
As per news report, economists said that higher home remittances and lower import bill is supporting external account. Cumulatively, the current account balance has shown a surplus of $805 million in July-August of FY21. The country is receiving over $2 billion inflows of home remittances since June 2020 and this will also help to build the depleting foreign exchange reserves.
On the other hand, the Ministry of Finance issued a press release on Thursday claiming that the SBP reserves are stable and ‘certainly not depleting’. The ministry said that the process for the refinancing of the loans and funds expected to flow back during the next two to three weeks has already been completed.
The press release insisted that the IMF program had not stalled and that Pakistan’s ongoing Medium-Term Note (MTN) Programme for the issuance of Eurobonds/international Sukuk is on track.