December 14, 2022
2 mins read

Pakistan’s forex kitty close to nil

An analyst dealing with South Asia said that the economic crisis will linger “until bold reforms are implemented.” …reports Mahua Venkatesh

Pakistan’s foreign exchange reserves at $6.72 billion – lowest in almost four years — mostly comprises borrowed money from other countries and multilateral agencies. Its own reserves are perilously close to nil. The major chunk of the reserves came as assistance from other countries including China and Saudi Arabia besides the International Monetary Fund (IMF).

An amount of $2.3 billion has come from China while Saudi Arabia has offered $3 billion. The IMF has also agreed to revive the financial assistance programme. It has already provided $1.2 billion. This implies that borrowed money makes up for the country’s forex reserves kitty.

“The qualitative difference between the reserves’ situation in 2019 and now is that at that time, whatever we had was our own. Today, each dollar we have is borrowed; we are currently maintaining negative reserves. So we are now at the mercy of certain friendly countries for our survival. If they pump in more dollars, we will survive the crisis and not default,” Dawn quoted Fahad Rauf, head of research at Ismail Iqbal Securities as saying.

pakistan flag

The newspaper added that Pakistan may receive planned foreign assurances that will help meet the country’s debt repayment obligations this year. “But what happens in the next fiscal year and after? The unfortunate reality is that we as a nation are not ready to accept the precariousness of our situation and continue to live beyond our means,” it noted.

While the International Air Transport Association (IATA) named Pakistan as one of the top five countries in the world to be blocking airline funds for repatriation and using the same to boost forex reserves, several foreign companies are equally worried about repatriation of their funds.

Though Islamabad has managed to avert a default of a $1 billion against international sukuk or a Shariah bond earlier this month, the State Bank of Pakistan, its central bank, held back payment of $225 million as repatriation of airline funds.

In its statement, Fitch said that the downgrade reflects further deterioration in Pakistan’s external liquidity and funding conditions, and the decline of foreign exchange reserves. This is partly a result of widespread floods, which will undermine Pakistan’s efforts to rein in twin fiscal and current account deficits.

An analyst dealing with South Asia told India Narrative that the economic crisis will linger “until bold reforms are implemented.” “But that is not going to be the case and now with general elections inching closer, policies may be more towards populism. We saw how Miftah Ismail (Pakistan’s former finance minister) was removed despite being able to steer away from a default,” he said earlier.

ALSO READ: Indian Navy chief begins 4-day Lanka visit

Previous Story

Simple winter snack recipes

Next Story

Gilgit Baltistan hit by acute food & energy crisis

Latest from -Top News

Activists Targeted Again in Balochistan

The Baloch Yakjehti Committee (BYC) on Tuesday condemned the enforced disappearance of Baloch leader Ghani Baloch, blaming Pakistan’s Law Enforcement Agencies and Frontier Corps….reports Asian Lite News The Baloch Yakjehti Committee (BYC),

Islamabad-Ankara-Baku Axis Sharpens Against India

Both Turkey and Azerbaijan have openly expressed solidarity with Pakistan and backed Islamabad in its military standoff with India, this month….reports Asian Lite News The evolving alliance between Islamabad, Ankara, and Baku

B’desh SC Acquits Islamist in War Crimes Case

ATM Azharul Islam was slapped with the charges of crimes against humanity committed during the Liberation War of the country in 1971….reports Asian Lite News The Supreme Court of Bangladesh on Tuesday

India Targets Pak Terror Ties in Guyana

The delegation met the Guyanese President, Mohamed Irfaan Ali, who had hosted a dinner to celebrate friendship and shared aspirations between the two nations…reports Asian Lite News Congress leader Shashi Tharoor, currently

EU Vows US Trade Deal

European Commission President Ursula von der Leyen phoned Trump on Sunday, after which he agreed to postpone the planned tariff increase until July 9….reports Asian Lite News The European Commission remains “fully
Go toTop

Don't Miss

Assassination bid: Imran’s PTI to hold countrywide protests

PTI leader Asad Umar’s announcement comes a day after Khan

Over 1000 dead in Pakistan floods

At least 3,116 km of highways and 149 bridges were