Pakistan’s forex reserves dip to an alarming $3.67 billion, not enough to cover imports

After a marginal increase last week, foreign exchange reserves held by Pakistan’s central bank have once again dropped– this time by $923 million to touch an alarming level of $3.67 billion—not enough to cover even a month’s imports. The situation may even lead to a shortage of fuel in February.

The country’s commercial banks, hit by shortage of foreign exchange, are not keen to provide letters of credit to the oil marketing companies and refineries. Besides due to the deepening economic crisis, imports of several goods including food items and raw materials have also been halted. This, many fear, will further disrupt the supply chain and create further shortage of food.

At the end of January last year, the central bank—State Bank of Pakistan held about $17 billion in foreign exchange reserves.

Amid the rapidly dwindling economic situation, the International Monetary Fund has agreed to visit Islamabad to continue discussions under the ninth review of its loan programme under the Extended Fund Facility (EFF) after the Shehbaz Sharif government promised to take tough decisions and fulfil all requirements laid by the multilateral lender.

Meanwhile, the country’s currency continued to slide. At the interbank market today, it was trading at (Pakistani) Rs 266.6 to a US dollar. Yesterday, it fell to a record low of Rs255.43 to a dollar.

Also read: Will Finance Minister Ishaq Dar take responsibility for Pakistan’s economic crisis?