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Pakistan’s forex level drops to the lowest level since December 2019

Pakistan's forex reserves continue to erode

Pakistan’s foreign exchange reserves has further dropped to a level of $16.4 billion – the lowest since December 2019 amid yawning current account as well as trade deficits coupled with surge in external debt repayment requirement and thinning inflow of foreign currencies. According to the News, the reserves are not adequate to cover imports even for three months.

The fall in the foreign exchange reserves has also impacted the Pakistani rupee. On Thursday, it breached the psychological 200 level to a US dollar.

The cash starved country is negotiating with the International Monetary Fund for a bailout package but the latter has come up with stringent preconditions which include rolling back fuel and electricity subsidy.

“The delay in the revival of the International Monetary Fund bailout along with lack of pledges of funding from friendly countries is adding pressure to the foreign reserves and the local unit,” the newspaper said.

The Shehbaz Sharif government has indicated that tough measures would be required to bring back the economy from the brink of collapse.

“The question is how far will the new government be able to implement those tough measures…there is already pressure on the common people with high inflation,” an analyst told India Narrative. 

The IMF bailout package is crucial as financial assistance from Saudi Arabia, UAE and even China will also kick in only after the multilateral lender releases its funds

While Pakistan urged China to roll over $2.3 billion Chinese commercial loans, Beijing is yet to concretise the proposal.

Meanwhile Pakistan has now decided to impose a ban on the imports of several non-essential and luxury items to save foreign exchange.

Also read: Pakistan headed for bankruptcy as bailout packages get delayed

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