Pakistan’s foreign exchange reserves are falling again

New Delhi: Despite support from the International Monetary Fund (IMF), Pakistan is currently struggling with declining foreign exchange reserves. The $1.166 million loan from the IMF under its Extended Financing Facility helped the country’s foreign exchange reserves, which are maintained by its central bank, to increase to $8.7 billion earlier this month. after falling below $8 billion in August (EFF). However, the country’s reserves once again fell to $8.6 billion for the week ending September 9, a drop of $176 million.

The decline in foreign exchange reserves was caused by foreign debt and other payments.
Although the most recent data from the State Bank of Pakistan showed that much-needed reserves are still above the $8 billion mark, policymakers fear that they have started to decline. SBP had more than $16 billion in reserves as of January this year.

According to initial reports, the devastating floods in Pakistan may have cost more than $40 billion in losses. Importantly, the floods destroyed large areas of crops, causing severe food shortages and rising prices.
According to Pakistani Prime Minister Shehbaz Sharif’s latest comments, the country’s economic situation was already dire when the Pakistan Muslim League-Nawaz (PML-N)-led coalition took power in April. The country was already experiencing a severe heat wave before the floods, which significantly affected the agricultural industry.
Compared to August of the previous year, food prices in Pakistan increased by 29.53%. The analyst said the impact of the floods has yet to be fully felt and Pakistanis should be prepared for the worst.

After approving a $6 billion loan deal in July 2019, the IMF suspended the program in 2020. A $1.17 billion loan, however, has just been used to relaunch the initiative. Alongside the IMF, a few other countries have stepped up to help the cash-strapped country, including China, Saudi Arabia, the United Arab Emirates and Qatar.

The situation is also difficult because of Pakistani politics. Although many experts have stressed the need for it, Islamabad has refused to restore trade with India. not only that, but he also rejected requests from aid organizations to purchase supplies from India. It also rejected aid from Bangladesh last week.

In his remarks at a convention for lawyers, Sharif added: “Even friendly countries think we are beggars.” Today, he said, “when we travel to a friendly country or call a friend, they assume we have come to ask for money.”

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