September 9, 2023
Banking Pakistan

Pakistan Central Bank Forex Drops Again As Crisis Deepens

Pakistan’s central bank said Thursday its foreign exchange reserves had dropped to $3.1 billion dollars, as the IMF and the government remained locked in urgent talks for emergency funding.

Pakistan’s economy is in dire straits, stricken by a balance of payments crisis as it attempts to service high levels of external debt, amid political chaos and a deteriorating security situation.

Analysts said it was enough to cover 18 days of imports.

“A default looks imminent, barring a miracle,” analyst Yousuf Nazar based in Britain tweeted.

An official with the ministry of finance, who asked not to be named, told AFP that this was the lowest level of central bank reserves since 2013 and 2014.

Economists say the government — which fears introducing tough conditions ahead of a general election later this year — has no choice but to bend to the demands of the IMF and revive a stalled aid package.

A deal would also crucially unlock further loans from friendly nations reluctant to help until the IMF programme is back on track.

On Wednesday, year-on-year inflation had risen to a 48-year high in crisis-hit Pakistan, recorded at 27.55 percent.

Nasir said it “reflects badly on the management — on the managers of the economy”.

A delegation from the IMF arrived in Islamabad on Tuesday.

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