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Karachi: On Thursday, the State Bank of Pakistan (SBP) added $1.16 billion from the International Monetary Fund under the Extended Fund Facility (EFF) to bring its foreign currency reserves to a two-month high of $8.857 billion.
According to the SBP, on August 31, it received profits of $1.16 billion, or SDR 894 million, under the EFF. This amount will be added to the SBP’s FX reserve position for the week ending on September 2.
The SBP continued, nevertheless, stating that for the week that concluded on August 26, its foreign currency reserves had dropped by a further $113 million.
The declining foreign currency reserves seriously threatened the economy’s external account throughout the previous fiscal year (FY22), which came to an end on June 30.
The State Bank saw a decline of 61.6% in its foreign currency reserves due to losses of $12.376 billion during the previous year. The SBP reserves were $20.073 billion in August 2021 and $7.697 billion in August of this year.
The significant decline in foreign exchange led to severe exchange rate instability and a 31% depreciation of the local currency in relation to the US dollar. On July 28, the dollar hit a record high of Rs239.5 due to changes in exchange rates.
The country’s central bank’s foreign currency reserves hit a two-month high of $8.857 billion on September 1 after the IMF contributed $1.16 billion. The reserves were $8.38 billion in July, as opposed to $9.816 billion in June.
With a massive $17.4 billion current account deficit in FY22, the government would need around $35 billion in FY23 to cover additional obligations related to its foreign commitments and debt repayments.
