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SBP foreign reserves are nearing zero as inflows remain elusive. The State Bank of Pakistan's (SBP) foreign exchange reserves have fallen to a record low of $3.7 billion as the country struggles to revive the International Monetary Fund's (IMF) bailout programme in order to avoid a debt default.
The SBP said in a statement that as of January 20, its reserves had fallen to $3,678.4 million due to external debt repayments, providing an import cover of less than a month — 0.73 month to be exact.
According to the central bank's statement, net foreign reserves held by commercial banks have also decreased to $5,774.8 million, bringing total liquid foreign reserves to $9,453.2 million.
Despite assurances from friendly nations, inflows have virtually ceased, as lenders appear hesitant to release funds until Pakistan completes the IMF's stalled programme.
As the coalition government desperately attempts to resurrect the ninth Extended Fund Facility review, it has requested that the Fund send a delegation to visit.
In response, Esther Pérez Ruiz, IMF Resident Representative in Pakistan, told Geo.tv that an in-person Fund mission will visit Islamabad from January 31 to February 9 to continue discussions under the ninth EFF review.
"The mission will focus on policies to restore domestic and external sustainability, including strengthening the fiscal position with long-term and high-quality measures while assisting the vulnerable and flood victims; restoring the viability of the power sector and reversing the continued accumulation of circular debt; and restoring the proper functioning of the FX market, allowing the exchange rate to clear the FX shortage."
SBP Governor Jameel Ahmad stated last Wednesday that the country anticipates inflows beginning "next week," but no physical funds have been received — with the exception of a $2 billion rollover by the Abu Dhabi Fund for Development.
Financial experts have urged the government to complete the IMF programme in order to pave the way for additional inflows, warning that a delay in reviving the Fund's programme could be disastrous for the economically distressed country.
The Financial Times, a British publication, has also warned that Pakistan's economy is in danger of collapsing due to the government's "failure to revive" the IMF deal.
Rolling blackouts and a severe foreign currency shortage, according to the report, make it difficult for businesses to continue operations.
"A lot of industries have already closed down, and if those industries don't restart soon, some of the losses will be permanent," said Sakib Sherani, founder of Macro Economic Insights.
