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.
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