Forex reserves fall to below $7 billion
ISLAMABAD – Pakistan foreign exchange reserves have declined to below $7 billion despite the fact that country received two billion dollars from Saudi Arabia recently.
The country’s foreign exchange reserves have declined to $6.9 billion during the week ended on January 11, 2019. The State Bank of Pakistan held reserves have reduced by $147 million in just one week period mainly due to loan repayment and other financings. The current reserves are enough to cover only six weeks imports bill of the country.
The reserves are sharply declining despite the fact that government had received two billion dollars from Saudi Arabia in last two months. “The reserves are under pressure due to massive repayment against previous loans”, said an official of the State Bank of Pakistan. He further said that Pakistan has to pay $9.06 billion loan (principal amount $ 7.27 billion and $ 1.787 billion interest) in the ongoing financial year 2018-19.
However, he informed that reserves would surge to over $10 billion within next few days, as Pakistan is expecting to receive inflows from Saudi Arabia and United Arab Emirates (UAE). “Saudi Arabia will deposit remaining one billion dollars of three billion dollars that were committed. Similarly, we are expecting UAE will deposit $3 billion in one installment,” he added.
Pakistan is also hopeful to receive around two billion dollars from China. However, the Chinese authorities have not finalised the package yet.
It is worth mentioning here that the international credit agency, Moody’s Investors Service, in its report last week, said Pakistan does not have enough foreign exchange reserves to pay its public and private external debt due over this year. “Foreign exchange reserves are low, and gross borrowing requirements are large in Pakistan, threatening the ability of these governments to refinance debt and fund deficits affordably”.
The credit rating agency said the total public and private external debt due over the next year is larger than foreign exchange reserves. Foreign exchange reserves are on lower side in Pakistan. The lower reserves threaten government to refinance debt, it noted. Pakistan’s foreign reserves declined owing to persistent current account deficit. The reserves coverage of imports has also fallen, Moody’s further said. “Reserves are now worth less two months of goods and services imports,” the credit agency noted.