Foreign reserves held by the State Bank of Pakistan (SBP) experienced a significant outflow of $294 million in the week ending December 23, 2022.
According to the central bank’s weekly report released on Thursday, the country’s total liquid foreign exchange reserves fell by $293 million (-2.4 percent) on December 23, 2022, to $11.7 billion, down from $12 billion the previous week.
During the week under review, SBP’s reserves fell by $294 million (-4.8 percent) to $5.8 billion, the lowest level since April 2014, compared to $6.11 billion.
Meanwhile, commercial banks’ net foreign reserves stood at $5.88 billion, representing a weekly increase of $1 million.
The decline in foreign exchange is attributed to debt servicing payments to various lenders, as well as the impact of US dollar smuggling from Pakistan into Afghanistan.
— SBP (@StateBank_Pak) December 29, 2022
Finance Minister Ishaq Dar said on Wednesday that Pakistan would not default anytime soon, despite admitting that recent problems have put the country in a position it does not deserve.
“How will there be a default? There is no chance that Pakistan will default,” Dar reiterated. He admitted that the country is in a difficult situation, but he believes it will “survive” if things are handled properly.
He went on to say that he is not to blame for the country’s reserves not totaling $24 billion as they did in 2016. “It’s not my fault. The flaw is in the system, and we must ensure Pakistan’s progress, “Dar stated.
The country’s declining foreign reserves, which stood at nearly $18 billion at the start of 2022, highlight Pakistan’s urgent need for external financing, possibly from bilateral lending partners or, as is expected, the International Monetary Fund.
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