Is an increase in foreign reserves the true indicator of a country’s progress? This is a matter of debate, but foreign reserves can be as indicative of a country’s strength as the stock market. However, those in the lowest income bracket may not benefit from these indicators, and may not be concerned about them.
An increase in foreign reserves can indicate the balance of payments, but it is optimistic to assume that it will have a direct impact on the lives of the poorest. The socio-political decisions made by politicians can affect foreign reserves, as the country often relies on borrowed money. Pakistan has faced several balance of payments crises in recent years, and has turned to the International Monetary Fund (IMF) for financial assistance.
To address the crisis, Pakistan implemented a series of reforms and policies as part of the IMF loan program, which had both short-term and long-term effects on the economy. These measures helped stabilise the currency, reduce inflation, and improve Pakistan’s external balance. Foreign exchange reserves increased, which reduced the risk of a balance of payments crisis in the near future. However, the reforms also came with social costs, including increased poverty and unemployment.
Pakistan’s foreign exchange reserves have increased significantly since 2018, helping to stabilise the country’s economy and restore confidence in its financial system. However, poverty in the country has also increased, and an increase in foreign reserves may not necessarily lead to a reduction in poverty. The government must implement policies that focus on reducing poverty and addressing structural issues in the economy.
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