Pakistan’s foreign exchange reserves plunged to $9.03 billion, not enough to cover even two months of imports, from $9.79B at the end of the last fiscal year. The decline of $753M in less than three months comes on the backdrop of poor exports and remittances amid large import bills and a big current account deficit. Pakistan’s foreign exchange reserves at $9.03 billion are approximately fives times lower than the richest Indian – Mukesh Ambani.
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In July-August, consolidated earnings via exports of goods and services and remittances equalled $8.921B, according to the balance of payments statement. Against this, imports of goods and services utilised $11.579B.
So a massive gap of $2.66B existed even if we count on both exports and remittances to finance our total imports. The current account deficit stood at $2.72B. The overall balance of payments statement witnessed a gap of $430M. The Pakistan rupee lost 2.26% of its value against the dollar in the interbank market in less than three months of this fiscal year.
Deep cuts in development funding will slow down economic growth, which may affect the private-sector credit appetite. The PTI government under Imran Khan is trying to shape up the balance of payments statement with heavier flows of foreign investment, including a strategic Saudi investment in the China-Pakistan Economic Corridor (CPEC) while keeping its focus on exports and investment intact.
Meanwhile, it is also keeping the International Monetary Fund (IMF) borrowing option open. However, indicators show that currently, the external account situation is far from promising.
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