KARACHI: Pakistan’s total liquid foreign exchange reserves amounted to $19.354 billion on Jan.26, down $285.9 million or 1.45 per cent from a week ago, the State Bank of Pakistan (SBP) said. Reserves of the SBP decreased $298 million to $13.234 billion.

The decrease in reserves is due to payments on account of external debt servicing and other official outflows. Net foreign exchange reserves held by commercial banks amounted to over $6.120 billion on Jan.26, up $12.9 million from the preceding week.

The State Bank of Pakistan (SBP) reported that its foreign exchange reserves amounted to $13.69 billion on Jan.12, down $2.45 billion from $16.14 billion at the end of June 2017.

The dip comes despite $2.5 billion borrowing from global bond markets at the end of November.

Static remittances, increasing trade deficit, insufficient rise in exports and relentless build-up of external debt are some of the reasons behind the softening position in the external account. During the current fiscal year, Pakistan has also raised about $1 billion through commercial short-term borrowing.

In view of a rising trade deficit coupled with slow growth in exports, the current account deficit has emerged as the biggest problem for economic managers. In the first five months of the current fiscal year, it rose 91 per cent year-on-year to $6.4 billion.

The current account deficit hit a record high of $12.4 billion in 2016-17, which hurt the external sector and put enormous pressure on the government to build reserves through more borrowing.

Internews