KARACHI: Foreign exch­a­nge reserves have been falling despite continued borrowing by the government from the international market.

This can be alarming for the country as most sources of foreign exchange show a declining trend.

The State Bank of Pakistan (SBP) reported on Thursday the country’s total liquid foreign exchange reserves amounted to $22.4 billion on Jan 27, down $811.3 million or 3.5 per cent from a week ago. This is the lowest level of total reserves since June 2016.

In the first quarter of the current fiscal year, the government borrowed about $1.1bn from the market.

However, debt servicing on external debt has also started growing. The SBP said that during the week ending on Jan 27, its reserves decreased $790m to $17.6bn. It attributed the decrease to external debt servicing, which included $500m loan repayment to the State Administration of Foreign Exchange, China.

Another report by the SBP showed that debt servicing in the first quarter of this fiscal year remained higher than debt servicing recorded in any of the four quarters of 2015-16.

A few months back, the SBP said debt servicing would remain around $5bn a year until 2020. The latest figure for the first quarter reflects the increasing size of debt servicing, which can push it to over $6bn by the end of the fiscal year.

Published in Dawn, February 3rd, 2017