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

Singapore’s Ruling Party Achieves Landslide Victory

Prime Minister Lawrence Wong, whose party won the election, thanked supporters.,..reports Asian Lite News Singapore’s ruling People’s Action Party (PAP) won 87 of the 97 seats in Parliament in Saturday’s general election,

Jaishankar, Lavrov Discuss Pahalgam Terror Attack

Both the Ministers discussed issues of Russian-Indian cooperation and the aggravation of India-Pakistan relations following the terrorist attack in Pahalgam. External Affairs Minister (EAM) S. Jaishankar spoke to the Russian Foreign Minister

Ukrainian forces to join VE  procession  

Ukrainian personnel will join around 1,000 UK armed forces members, including soldiers on horseback and military bands, to symbolise “the global support for their continued fight for freedom” against Russia  krainian armed

Rajnath Singh to skip Russia visit

The decision comes amid rising tensions between India and Pakistan following the recent terror attack in Pahalgam, Jammu and Kashmir…reports Asian Lite News Defence Minister Rajnath Singh will not likely attend Russia’s

WAVES 2025: Jaishankar Advocates Cultural Pluralism

External Affairs Minister S. Jaishankar delivered a powerful address at the WAVES 2025 Global Media Dialogue, highlighting the significance of cultural pluralism in shaping global change. Speaking on the second day of
Go toTop

Don't Miss

Over 200 Afghan detainees freed from Pakistani prison

Since the return of the Taliban regime in Afghanistan on

Setback for Pakistan in Reko Diq case

TCC has filed an appeal against the High Court of