Pakistan’s foreign exchange reserves run out in IMF deadlock

Pakistan’s foreign exchange reserves exhaust IMF deadlock | Photo credit: iStock Images

Pakistan’s foreign exchange reserves are running out after the persistent deadlock on the renewal of the IMF package.

Pakistan’s total foreign exchange reserves amounted to USD 25.027 billion; foreign reserves held by the SBP stood at over $ 18 billion and commercial banks at $ 6.45 billion, Geo News reported.

Meanwhile, in the week ending December 10, foreign exchange reserves declined by $ 90 million to $ 18.56 billion.

Of the $ 802.3 million in foreign loans raised in November 2021, Islamabad received $ 663.2 million from international commercial banks, Geo News reported.

Sources indicate that Islamabad’s inability to complete the 6th review under the IMF’s $ 6 billion package is the reason for the reliance on easy dollar inflows.

The publication citing prominent official sources said: “It was Islamabad’s inability to complete the 6th review under the IMF’s $ 6 billion Extended Finance Facility (EEF), which maintained the country’s heavy dependence on inflows of cheap dollars through commercial banks.

Although it planned to raise $ 1 billion through the launch of the Sukuk Bond, the government was unable to move forward due to weak appetite in the international market, the publication reported.

It was then decided that the bond would be launched in the second half (January-June) of the current fiscal year, Geo News reported.

Analysis of the data shows that the government is forced to opt for short-term commercial loans to meet its annual budget targets on external inflows.

Pakistan continues to depend significantly on international commercial banks to generate inflows of dollars, The News reported on Friday.

Out of the total budget estimate of USD 14,008 billion for the entire 2021-22 fiscal year, Islamabad has so far generated USD 4.699 billion in the first five months of the current fiscal year.

Analysis of official data showed that the government was forced to resort to short-term commercial borrowing to close the gap and meet its budget targets on external inflows on an annual basis, Geo News reported.