KARACHI: Foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $107 million to $4 billion during the week ending June 9, 2023.

However, Pakistan reportedly paid $1bn to China on Monday, which brought down the SBP reserves to $3bn. The finance ministry neither confirmed nor denied the media report.

Finance Minister Ishaq Dar has expressed disappointment over the way the International Monetary Fund (IMF) is dealing with Pakistan vis-à-vis the bailout package, saying the lender is wasting his time.

The time to complete the $6.7bn loan programme will expire on 30 June, while the country was to receive two installments of about $2.2bn before this date. The IMF has raised questions about the budgetary measures for the financial year 2023-24, while rating agencies warned that time is running out for Pakistan to convince Fund for the much-needed bailout package.

Analysts said the country faced the deep trouble of poor foreign exchange reserves during the entire FY23 and could do so in FY24 as well, with or without the IMF support.

The SBP reported the total foreign exchange reserves of the country at $9.378bn, including $5.359bn held by the commercial banks.

Exchange rate

The poor forex reserves have negative impact on the exchange rate. The country has reserves hardly enough for two weeks’ imports. The tight control over imports has heavy cost on the economy.

The State Bank permitted importers to arrange dollars on their own, which led to escalation of its rates in the open and grey markets.

Currency dealers in the open market quoted the dollar rate at Rs295 on Thursday, against Rs294 a day before. The State Bank reported the closing price of dollar in the interbank market at Rs287.37, an increase of 19 paise from a day earlier.

Published in Dawn, June 16th, 2023