Pakistan’s central bank sends an SOS to Prime Minister Sharif over the country’s dwindling foreign exchange reserves

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NNA |
Updated:
09 July 2022 15:24 STI

Islamabad [Pakistan]July 09 (ANI): As Pakistan’s economy continues to be in shambles, the country’s central bank, the State Bank of Pakistan, has issued an SOS appeal to the government led by Prime Minister Shehbaz Sharif over the decline in its foreign exchange reserves and its negative impact on the country. ability to import.
The bank has warned the government that if dwindling foreign exchange reserves are not addressed, it will become difficult for the country to sustain imports from other countries, local media reported.
This SOS call comes amid a sharp drop in the bank’s foreign exchange reserves. SBP’s foreign exchange reserves fell to $8.24 billion on June 17. This trend of declining reserves is expected to continue due to debt pressure on the country, media portal Asian Lite reported.
To help preserve the falling Forex, SBP advocated a temporary import ban on all non-essential goods. The bank apparently pointed to the risk of increasing fuel imports given the country’s energy security.

Total oil imports into Pakistan amounted to USD 9.7 billion in the financial year 2020-21. However, global inflation has pushed Pakistan’s import bills to over $14.46 billion in the July-April period of the current fiscal year. With the increase in imports, the country’s Forex position has tightened.
As Pakistan has also increased its energy imports, foreign exchange reserves are deteriorating to the point of threatening the country’s ability to import fuel.
The Pakistani government has already removed many fuel subsidies, which has led to a sharp increase in domestic energy prices. According to SBP, the Ministry of Energy and Petroleum should be instructed to formulate and implement strict policy measures to contain the demand for energy products, according to the media portal.
To add insult to injury, the depreciation of the Pakistani Rupee (PKR) is making the problem even worse. Its steady depreciation continues with the exchange rate falling from 199 PKR/USD on June 6 to 207 PKR/USD on July 6, 2022.
It is a vicious circle in which Pakistan is trapped. It should be noted that the depreciation of the currency leads to an increase in fuel import bills, which further weakens the fiscal position. On currencies, SBP has recently attempted large-scale market interventions. However, its limited ability to control the exchange rate produced only paltry returns. (ANI)

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