Pakistan’s foreign exchange reserves declined by $260 million to $15.88 billion during the week ending November 30, 2018, according to the latest data released by the State Bank of Pakistan (SBP).
Image: dailytimes.com.pk
This marks the fourth consecutive week of decline in the country’s forex reserves, which have now fallen by over $1 billion since October 19, when they stood at $16.96 billion. The reserves have declined by $4.4 billion or 21.7% since their peak of $20.28 billion in May 2018.
The decline in forex reserves is a major concern for Pakistan, as it could make it difficult for the country to repay its foreign debts and meet its import needs. Pakistan’s current account deficit widened to $18 billion in the fiscal year 2018, from $12.1 billion in the previous year. The country’s foreign debt has also increased to $105 billion, from $95 billion in 2017.
The government has taken a number of steps to address the decline in forex reserves, including increasing interest rates, raising taxes, and implementing a new currency devaluation policy. However, these measures have not yet had a significant impact on the reserves.
The SBP has said that the decline in forex reserves is due to a number of factors, including increased import payments, a decline in exports, and a reduction in remittances from overseas Pakistanis. The bank has also said that the decline is temporary and that it expects the reserves to recover in the coming months.
However, analysts are not so optimistic. They believe that the decline in forex reserves could continue in the coming months, which could lead to a balance of payments crisis in Pakistan. A balance of payments crisis occurs when a country is unable to meet its foreign debt obligations or to import essential goods and services.
If Pakistan experiences a balance of payments crisis, it could be forced to seek a bailout from the International Monetary Fund (IMF). An IMF bailout would come with a number of conditions, including austerity measures and structural reforms. These conditions could have a negative impact on the Pakistani economy and on the lives of ordinary Pakistanis.
The government needs to take urgent action to address the decline in forex reserves. If it fails to do so, Pakistan could face a balance of payments crisis and a deep economic recession.
Image: swarajyamag.com
Pakistan Forex Reserves November 2018
