Karachi August 25 2022: SBP foreign exchange reserves for the week ending August 19, 2022, were down by USD 87 million to USD 7,809 million as per data released by the Central Bank.
Notwithstanding the recent improvement in the current account and the Rupee, FX reserves have halved from $16.4 billion in February to $7.8 billion on August 19th, as official inflows have been outpaced by official outflows.
The drying up of official inflows—namely multilateral, bilateral, and commercial borrowing as well as Eurobond and Sukuk issuance—was in large part due to the delay in completing the review of the IMF program because of policy slippages. Meanwhile, on the outflows side, debt servicing on foreign borrowing continued as repayments came due.
However, with the expected completion of the upcoming IMF review and the additional assistance secured from friendly countries, FX reserves are projected to rise to around $16 billion during FY23.
"To ensure this and to support the Rupee going forward, it will be important to contain the current account deficit to around 3 percent of GDP by moderating domestic demand and energy imports. In addition, it will be critical to keep the IMF program on-track by following through on the agreed fiscal tightening and structural reforms over the next 12 months" says State Bank of Pakistan in a statement.
At present, SBP reserves stand at the level of USD 7,809 million as of 19th August 2022 compared to USD 7,809 million at the end of the week ending 12th August 2022.
During the same period, foreign exchange reserves held by commercial banks decreased by USD 4 million to the level of USD 5,712 million as of 19th August 2022.
Overall reserves held by the country witnessed an increase of USD 92 million to USD 13,521 million during the week ended 19th August 2022.