Pakistan’s foreign exchange reserves have fallen below $10 billion, threatening to turn into a full-blown economic crisis unless policymakers secure a loan from the International Monetary Fund.
The stock fell $366 million in the week ended May 27 to $9.72 billion, the central bank said in a statement posted on its website. That’s down about 50% from August and enough to pay for less than two months of imports.
The dollar shortage could worsen as the country forecasts its trade deficit will hit a record $45 billion in the year ending June.
Authorities raised fuel and electricity prices, a key condition to unlock the remaining $3 billion of an existing loan from the multilateral lender.
In addition to raising fuel prices, Pakistan will have to make further fiscal adjustments to reduce the FY23 budget deficit to secure the IMF loan, said Raphael Mok, country risk manager for Asia. at Fitch Solutions in Singapore.
That will likely involve measures to boost tax collection and reduce subsidies and capital spending, he said. 30 luxury goods, including cars,” Mok said.
Dear reader,
Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and up-to-date with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.
As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.
Support quality journalism and subscribe to Business Standard.
digital editor