The State Bank of Pakistan (SBP) reported that its foreign exchange reserves have decreased by $354 million to $4.2 billion as of March 24.
Pakistan is currently facing an economic crisis and is struggling to secure external financing. The country with less than a month of import coverage. The net forex reserves held by commercial banks are $5.6 billion, which is $1.3 billion more than the SBP, resulting in total liquid foreign exchange reserves of $9.8 billion.
Pakistan’s economy has been declining, and authorities are trying to negotiate a staff-level agreement with the International Monetary Fund (IMF) for a $1.1 billion loan tranche, part of a $6.5 billion Extended Fund Facility (EFF) agreed upon in 2019. The IMF funding is crucial for Pakistan to secure other external financing avenues and avoid defaulting on its obligations.
The IMF has stated that discussions have been progressing well toward policies, and financial assurances are standard in IMF programs. It also emphasized that all program reviews require credible assurances that there is sufficient financing to ensure the borrowing member’s balance of payments is fully financed for the next 12 months, with good prospects for financing over the remainder of the program.
Several friendly countries, including Saudi Arabia, China, and the UAE, have pledged to provide financial aid to assist Pakistan’s balance of payments.
The IMF’s Director of Strategic Communications, Julie Kozack, has emphasized that timely financial assistance from external partners is critical to support Pakistan’s policy efforts and ensure a successful review.
