As the cash-strapped country met its debt commitments to prevent a potential default, the State Bank of Pakistan’s (SBP) foreign currency reserves decreased even more, and the funding options shrank as a result of a stagnant International Monetary Fund (IMF) program.
The SBP reported in its weekly bulletin that as of the week concluded March 31, its foreign currency reserves had dropped by $36 million to $4.2 billion, covering imports for less than a month.
The statement stated that the net foreign exchange reserves owned by commercial banks equal $5.51 billion, which is $1.3 billion more than the SBP, taking the total liquid foreign exchange assets of the nation to $9.75 billion.
For Pakistan to open up other foreign financing options and avoid defaulting on its commitments, IMF funding is essential.
In order to close its balance of payment gap for this fiscal year, which concludes in June, the IMF has urged Pakistan to obtain guarantees on foreign funding from allies and multilateral partners.
Ishaq Dar, the Minister of Finance and Revenue, met with the US ambassador to Pakistan Donald Blome, during which, according to reports, America pledged its help for Pakistan in order to restart its delayed IMF program.
However, the World Bank and Asian Development have forecast that Pakistan’s GDP will decline by less than one percent in the current fiscal year and have issued a warning that the failure of the IMF program to be completed, the inability to obtain financing from important bilateral partners, and political instability may cause a major macroeconomic crisis to break out.