KARACHI: The central bank’s foreign exchange reserves have further declined by $170 million to hardly stay at $4bn, the State Bank of Pakistan (SBP) said on Thursday.

It said the reserves declined due to debt payments, which are key hurdles to the external front of the economy.

Despite a steep fall in the current account deficit, the government is unable to meet the grossly reduced challenge. The current account deficit during the first eight months of the current financial year fell to just $3.86bn against $12bn last year, but the poor foreign exchange reserves are unable to meet the requirement.

Pakistan has been asking the IMF to release a tranche of $1.1bn related to the ninth review, but the Fund demanded to arrange the $6bn required to meet the repayments until end-June 2023. Pakistan has held several meetings with the IMF, but a staff-level agreement is still awaited.

Topline Securities issued a report on Thursday about the payments of international bonds. “Based on our information, Pakistan has made coupon payments on different global bonds,” it said. About $125 million has already been paid, while another $167 million is due on April 15 and will be paid on time, it said.

After this, another big payment of $167m is due on October 2023. And then there is a maturity of $1bn in April 2024, the report said.

These are the payments of international bonds, while the country needs about $6bn for the debt servicing of bilateral and multilateral loans, including the donor agencies.

According to the SBP, the total foreign exchange reserves of the country during the week ended on April 7 were $9.564bn, including $5.526bn of commercial banks.

Meanwhile, the rupee appreciated by Rs1.71 on Thursday in the interbank market. Within two sessions, the PKR recovered Rs3.52 against the US dollar. A day earlier, the local currency recovered by Rs1.81 after reaching a record high of over Rs288. The open market reported the dollar price at Rs292 against Rs294 a day before.

Published in Dawn, April 14th, 2023