Karachi: According to data available, the foreign exchange reserves held by the State Bank of Pakistan (SBP) are said to have fallen by around $3.9b since October 2016 till July 21st, 2017.
Despite government borrowing crossing the $4.4b mark, the reserves still fell due to increasing pressure on the exchange rate.
On July 5th Pakistan rupee fell sharply both in the interbank and kerb market to reach a 2.5 year high of Rs 108 from Rs 104.91, the previous day. The PKR remained relatively stable since August 2015, and according to a Topline Security report, the currency had devalued annually by 5 per cent in the last decade or so.
The country’s total accumulated debt servicing figure in first three quarters of 2017 stood at $5.2b, out of which $1.55b was paid out in 1st quarter, $1.25b in 2nd and $2.43b in the third.
According to currency pundits, the central bank may need to obtain more loans from commercial banks since the outflows are higher than anticipated.
Commercial borrowing is considered to be more expensive in comparison to those offered by bilateral and multilateral institutions. They expressed fears that dwindling foreign exchange reserves could sharply impact the dollar rate in the inter-bank market.
Last year, the government forecasted a figure of $2b to be obtained from commercial banks, but the cap was broken and it ended up borrowing more than $4.4b during entire FY 2016-17.
