ISLAMABAD - Pakistan’s foreign exchange reserves are sharply depleting due to widening current account deficit and repayment of previous loans, as the reserves have tumbled by more than $2 billion since last one month.

The current foreign exchange reserves can cover less than three months of imports. Foreign exchange reserves stood at $16.4 billion as of May 25 in which $10 billion were held by the State Bank of Pakistan and $6.4 billion by commercial banks. The reserves would remain under pressure in outgoing month due to current account deficit.  The reserves had declined by $286 million in week ended on May 25, $479 million in week ended on May 18, $364 million in week ended on May 11, $347 million in week ended on May 4 and the reserves had tumbled by $593 million during week ended on April 27.

However, the government hopes to receive some inflows from a friendly country, which would ease the pressure on the foreign exchange reserves. “We are hoping to receive around $2 billion from a friendly country in June that will help us in building the reserves,” said an official of the ministry of finance. He said that aforesaid inflows were expected in May but now the country is expecting to receive these in June. It is speculated that inflows are expected from state-owned Chinese Bank. Pakistan had earlier received a $1 billion loan from China at end-April.

Pakistan has borrowed $9.6 billion from external sources only in ten months (July to April) of the current fiscal year. Keeping in view the current trend, the government is all set to break the previous year’s record of borrowing around $10 billion in a single year. Last year, the government had borrowed $10.2 billion from external sources as against the target of $8 billion. The borrowing can reach $12 billion during entire current fiscal year.

The government had already massively borrowed from the commercial banks during ten months. Major part of the borrowing of $7.91 billion was from the commercial banks which provided $2.92 billion during ten months of the current fiscal year. The government had projected only $1 billion borrowing from the commercial banks during the entire ongoing financial year. However, the government had gone beyond the limit in just ten months to sustain its foreign exchange reserves.

The incumbent caretaker government would face the challenge of maintaining foreign exchange reserves. The PML-N government had massively borrowed during its five years tenure but it could not sustain the foreign exchange reserves. The country’s external debt liabilities stood at $91 billion against the total of $60.9 billion of 2013. Similarly, the domestic debt also surged to Rs 16 trillion as against Rs 9.5 trillion in 2013).

Pakistan’s overall external debt and liabilities had increased to a record $91.8 billion. The International Monetary Fund (IMF) had recently estimated Pakistan’s external debt and liabilities could peak to $144 billion in the next five years from $93 billion in the current financial year of 2018.