Karachi January 26 2023: SBP foreign exchange reserves for the week ending Jan 20th, 2023, were decreased by USD 923 million to USD 3,678 million as per data released by the Central Bank.
This is the lowest level of reserves since February 14th 2014 when Central Bank reserves were recorded at USD 3,196 million.
“The lack of fresh financial inflows and ongoing debt repayments have led to a continuous drawdown in official reserves” says Central Bank in its statement.
The current account deficit narrowed by around 60 percent to $3.7 billion in H1-FY23. This substantial reduction was due to a sharp contraction in imports, reflecting the impact of policy tightening and administrative measures. The contraction in imports was broad-based, with all major groups, except food and petroleum groups, recording declines. Petroleum imports increased by 17.4 percent (BOP data), resulting in their share (in total imports) rising to 34.1 percent in H1-FY23 from 23.7 percent in H1-FY22.
In this backdrop, the MPC noted that effective implementation of energy conservation measures and appropriate pricing of petroleum products is critical for much-needed reduction in energy imports. The benefit of an 18.2 percent fall in imports was partially offset by declines in export receipts and remittances.
Notwithstanding the reduction in the current account deficit, the external sector remains under stress due to delay in realization of official financial inflows, debt repayments and ongoing political uncertainty. In this regard, the SBP feels that the completion of the pending 9th review under the IMF’s EFF is critical for reducing uncertainty and unlocking multilateral and bilateral inflows.
At present, SBP reserves stand at the level of USD 3,678 million as of 20th January 2023 compared to USD 4,601 million at the end of the week ending 13th January 2023.
During the same period, foreign exchange reserves held by commercial banks decreased by USD 68 million to the level of USD 5,774 million as of 20th January 2023.
Overall reserves held by the country witnessed an increase of USD 990 million to USD 9,453 million during the week ending 20th January 2023.
