Pakistan’s forex reserves double to $8.73 billion, reach nine-month high

Pakistan's foreign exchange reserves have reached a nine-month high of $8.73 billion following a financial bailout from the IMF and support from other nations. However, Pakistan still faces challenges with its external debt, which has reached $100 billion.

Sounak Mukhopadhyay
First Published21 Jul 2023
FILE PHOTO: Pakistan's Prime Minister Shehbaz Sharif, addresses the 23rd Shanghai Cooperation Organization (SCO) Summit, hosted virtually by India, in Islamabad, Pakistan July 4, 2023. Press Information Department (PID)/Handout via REUTERS
FILE PHOTO: Pakistan’s Prime Minister Shehbaz Sharif, addresses the 23rd Shanghai Cooperation Organization (SCO) Summit, hosted virtually by India, in Islamabad, Pakistan July 4, 2023. Press Information Department (PID)/Handout via REUTERS(Press Information Department (PID)/Handout via REUTERS)

Pakistan's foreign exchange reserves have surged to a nine-month high following a fresh financial bailout from the International Monetary Fund (IMF). 

The country's reserves nearly doubled to $8.73 billion as of July 14, with inflows coming from the IMF and friendly nations like Saudi Arabia and the UAE. This is the highest reserve level since October when the central bank held $8.76 billion.

The financial assistance, totaling around $4.2 billion received last week, comes as Pakistan seeks to stabilize its balance of payments position amid a 13% decline in exports and a 25% drop in foreign direct investment in the past year, Bloomberg reported.

China's Exim Bank has extended a $600 million commercial loan to Pakistan, further contributing to the reserve boost, which will be reflected in the reserves next week.

Also Read: Pakistan seals $3 Billion lifeline: IMF deal offers hope for economic resurgence

With the fresh inflows and local commercial banks holding $5.34 billion, Pakistan's total foreign exchange reserves now stand at $14.1 billion, as reported by the central bank.

The financial aid from the IMF has helped Pakistan avert an imminent default and provided much-needed relief to the outgoing government of Prime Minister Shehbaz Sharif, whose term is concluding next month.

Despite the recent financial boost, Pakistan faces challenges concerning its external debt, which has reached $100 billion. The IMF has cautioned that the country's debt could become unsustainable if it fails to meet the bailout program's goals. 

The report also points out that risks to debt sustainability have heightened due to limited international financing options and substantial funding requirements.

Pakistan will need an additional IMF programme and support from other international lenders beyond the current election cycle and the ongoing standby arrangement, according to a 120-page report earlier published by the IMF. The report delves into Pakistan's macroeconomic outlook and emphasises the necessity for further financial assistance to address the country's cash-strapped situation, reported the Dawn newspaper.

(With Bloomberg inputs)

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HomeNewsworldPakistan’s forex reserves double to $8.73 billion, reach nine-month high

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