ISLAMABAD, Dec. 15 (INP-WealthPK)—Pakistan urgently needs international assistance to stabilise its foreign exchange reserves, which have touched the lowest level after the year 2019, WealthPK reports.
The foreign exchange reserves of Pakistan are declining with each passing day and are at the lowest level after 2019.
Dr Jalil Malik, a finance expert at Quaid-i-Azam University Islamabad, told WealthPK that Pakistan’s foreign exchange reserves were in a critical condition. “They are declining due to foreign payments. The government should focus on stabilising the economy of the country. Pakistan urgently needs international assistance to put its economy back on track,” he added.
He said that the government paid $1,000 million in international Sukuk bonds and other repayments, due to which the foreign exchange reserves declined. According to the governor of the State Bank of Pakistan (SBP), foreign reserves will increase in the second half of the current financial year.
The Asian Infrastructure Investment Bank (AIIB) has announced a grant that will increase Pakistan’s foreign exchange reserves. Saudi Arabia has already extended its $3 billion support to Pakistan to stabilise its foreign exchange reserves.
“The drop-in inflow of money has changed sentiments in the interbank and encouraged importers to buy the dollar at a higher rate before it becomes expensive. Pakistan’s economy faces serious challenges due to fast-decreasing foreign exchange reserves and political instability,” said Dr Jalil.
He said that the trade deficit in the ongoing year was propelled by the highest-ever increase in oil prices and commodities in the international market due to the disruption of the supply chain caused by the ongoing Ukraine crisis. He added that Pakistan was facing growing economic challenges, including high inflation, sliding foreign exchange reserves, a widening current account deficit and a depreciating currency.
Dr Jalil said that earlier foreign exchange reserves were decreasing on a weekly basis owing to an increase in imports and fell below $7 billion, which was an alarming situation. “However, funds from multi-lateral partners will improve the situation,” he added.
He said that dollars were urgently required to save Pakistan from a crisis-like situation. He said that the country needed international assistance to boost its foreign exchange reserves. He added that the SBP should focus on reducing inflation.
Pakistan will need to increase exports and foreign direct investment to maintain or increase foreign exchange reserves.
Dr Jalil said that Pakistan would have to boost exports and foreign direct investment to avoid perpetual plunging into boom and bust cycles. “This boom and bust cycle cannot be overcome until the private sector attracts dollar inflows. Depleting reserves, a widening current account deficit and the depreciation of the rupee against the dollar have caused a balance of payments crisis,” he added.
He said that the SBP figures showed that the debt burden increased both in absolute terms and in terms of the size of the national economy. He added that Pakistan’s economic viability required serious long-term reforms.
“Pakistan is facing a challenging economic situation. The country is totally dependent on foreign loans and grants whether they come from the International Monetary Fund, United Arab Emirates, Saudi Arabia, Turkey and China or from any other financing institution,” Dr Jalil told WealthPK.
