KARACHI: Around $450 million drained out from the State Bank’s reserves within a week despite the fact that no extra-ordinary payments were made.
These were all routine payments, the central bank had made, experts said.
The State Bank reported that total reserves of the country fell to $15.046 billion, a fall of $371 million in a week (June 8-15).
However, State Bank’s reserves fell by $437 million to $10.680 billion. Reserves of commercial banks were up by $65 million to $4.365 billion.
The falling reserves may cast a dark shadow on country’s already strained payment capability, particularly in the wake of rising current account deficit and trade gap.
The repayment to International Monetary Fund has started.
To avoid external payment default, the country had acquired a loan of $7.8 billion in 2008 from the multilateral donor.
Pakistan paid $400 million on May 24 to the IMF while another $400 million was paid in February this year.
Another installment of over $110 million is scheduled at the end of this month.
The local currency has already taken a weak position losing ground against the US dollar as it lost 3.5 per cent of its value within a month.
Currency dealers said falling reserves are a clear message the country is heading towards another default like situation similar to the one it faced in 2008.
Despite a sharp increase in remittances of overseas Pakistanis, touching high mark of $13 billion in the current fiscal, the current account deficit is rising.
Pakistan expected dollar inflows from the Coalition Support Fund for services it offered to Nato forces in Afghanistan and disbursement of IMF loan but worsening relationships with Untied States eroded these hopes.
Pakistan stopped Nato supplies to Afghanistan in November last year after the Salala incident in which US forces attacked and killed two dozen Pakistani army personnel. The situation has yet not improved despite continued bilateral talks on the issue.
Experts say the huge trade gap is the real problem for the country. This is due to falling exports and increasing imports that created a gap of about $19 billion. The gap may widen by the end of the current fiscal year on June 30.
“The next couple of months are critical since the country would again be facing default if foreign exchange inflows are not revived soon. The rupee may actually slide to Rs100 to a dollar level,” said Anwar Jamal, a currency expert and dealer.