External debt payments drive national FX reserves to 9-year low

Pakistan’s foreign exchange reserves fell to a nine year low last week following a heavy external debt and other payments worth nearly a billion dollars.

According to data provided by the State Bank of Pakistan (SBP) on Thursday, during the week ended on January 20, 2023, foreign exchange reserves held with the central bank fell by $923 million due to external debt repayments.

This meant that the country’s reserves fell from $10.444 billion for the week ending January 13, 2023, to just $9.453 billion for the week ending January 20, 2023.

This was the lowest level since December 2018 when national reserves had fallen to $9.708 billion.

At the same time, the reserves held with the central bank fell from $4.601 billion to $3.678 billion. This was the lowest value of reserves held by the SBP since Feburary 2014 when reserves had dipped to $3.919 billion.

The reserves held by commercial banks also saw a dip during the past week. They fell from $5.842 billion last week to $5.775 billion this week, a difference of $67.6 million.

The level of reserves are far below the level required to cover a month’s imports of the country.