On the brink: Pakistan’s foreign exchange reserves fall to 3.5 year low

Data released by the State Bank of Pakistan (SBP) on Thursday showed that the country made $1.233 billion in external debt payments in the first week of the new year.

As a result, foreign exchange reserves with the central bank fell to a precarious $4.3343 billion.

Meanwhile, reserves with the commercial banks maintained at $5.845 billion, down by $1.4 million from the last week.

Cumulatively, Pakistan’s foreign exchange reserves fell to $10.189 billion.

This was the lowest level of national reserves since June 30, 2019, when the reserves had dipped to $10.163 billion. However, what was different then was that SBP held reserves of $7.285 billion while commercial banks held $2.878 billion.

For reserves held by the central bank, this was the lowest value of reserves held since October 31, 2013, when reserves had fallen to $4.229 billion.

The lowest reserves seen by SBP since 2010 was $3.048 billion, which were reached on November 30, 2013.

The deficit between reserves held by SBP and commercial banks also increased to $1.501 billion.

PDM performance

Since the Pakistan Democratic Movement (PDM) government took over in April last year, the reserves have been consistently declining, falling from $14.365 billion to $10.188 billion, or by $4.177 billion.

The reserves with the SBP, however, saw a bigger decline with $7.082b, falling from $10.499 billion to $4.343 billion.