KARACHI: In the absence of any dollar inflows from the International Monetary Fund (IMF) or friendly countries, foreign exchange reserves of the State Bank of Pakistan (SBP) dropped to $4.34 billion, the lowest since February 2014.

The SBP said on Thursday its reserves decreased by $1.23bn during the week ending on Jan 6 due to external debt repayments.

The country has been facing a serious dollar shortage, which is resulting in restricted imports of even food and industrial raw materials. The latest position of foreign exchange reserves reflects that the country doesn’t have sufficient dollars to cover even one month of average imports.

Net foreign exchange reserves held by commercial banks amounted to $5.84bn while the total liquid foreign exchange reserves were $10.18bn, data showed.

Reserves have been in sharp decline since the beginning of 2022-23. Analysts expect high inflation and low industrial output in the months ahead as production is being squeezed for the unavailability of imported raw materials.

Manufacturers associated with the Karachi Chamber of Commerce and Industry claimed recently that banks weren’t even processing $1,500 payments for the import of spare parts — a phenomenon that’s bringing the entire supply chain to a standstill.

Since the change of government in Islamabad last year, the SBP’s foreign exchange reserves have been falling amid big debt repayments. Reserves stood at $10.5bn in April when the Imran Khan-led PTI government was replaced by the Shehbaz Sharif-led coalition government.

The controlled exchange rate policy, a hallmark of Mr Dar’s brand of economic management, has been roundly condemned by the business community. Foreign trade is almost at a standstill because of a dollar shortage that’s reflected by the widening gap in the official and actual exchange rates as well as a rapidly expanding black market for greenback trading.

Finance Minister Ishaq Dar spooked foreign currency accountholders recently by implying that the dollars held in banks by private citizens were also part of the country’s reserves. He clarified his remarks subsequently and assured the public that the government didn’t intend to raid their foreign currency accounts.

Published in Dawn, January 13th, 2023

Now you can follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Road to perdition
Updated 01 Feb, 2023

Road to perdition

This is also the time of reckoning for those who sowed the seeds of a disastrous policy against militants.
Transport tragedies
01 Feb, 2023

Transport tragedies

TWO tragedies over the weekend illustrate the weak protocols governing the safety of transport in Pakistan. In fact,...
Disqualifying Jam Awais
01 Feb, 2023

Disqualifying Jam Awais

IT appears that there may be some kind of small punishment after all for PPP lawmaker Jam Awais, who was pardoned ...
Police Lines bombing
Updated 31 Jan, 2023

Police Lines bombing

Where the menace of terrorism is concerned, the government and opposition need to close ranks and put up a united front.
Oil price hike
31 Jan, 2023

Oil price hike

THE record single-day increase in petrol prices, preceded by massive currency depreciation, signifies the ...
Babar Azam’s award
31 Jan, 2023

Babar Azam’s award

BABAR Azam might not have lifted many trophies as Pakistan’s all-format captain in the last year but the star...