KARACHI: Foreign exchange reserves of the country have shown some recovery after a very long peiod as they increase by 186.1 million dollars to 8.32 billion.
Data released by State Bank shows that between 25 September and October 4 it’s reserves rose by 180.3 million dollars to touch 4.9 billion.
While those held by commercial banks inched up by 5.8 million dollars to stand at 3.46 billion.
Asian Development Bank on Sept. 30 approved a 500 million dollar loan to help Pakistan deal with mounting economic woes.
The first installement of the loan has come in and this has augmented the reserves..
The country’s foreign exchange reserves hit an all-time high of $16.5billion in October last year, but have been falling since due to weak economic fundamentals, political uncertainty andsecurity concerns.
Forex reserves down to just $2.48 billion in real terms
Friday, October 17, 2008
By Khalid Mustafa
ISLAMABAD: Pakistan’s foreign exchange reserves on Thursday touched a record low of $2.48 billion in real terms, barely enough to cater to the needs of one and a half month imports.
According to a senior official at the Ministry of Finance, the country is left with overall foreign reserves of $7.3 billion as of today (Thursday), of which the State Bank of Pakistan possesses $3.98 billion and the commercial banks $3.32 billion.
Out of $3.98 billion, $1.5 billion have been consumed in the wake of forward booking liabilities, leaving the central bank with only $2.48 billion in real terms.
However, the State Bank of Pakistan in its press release issued on Thursday night said the country had $7.74 billion reserves as of October 11, 2008. The SBP spokesman could not be contacted for comments despite repeated attempts by this correspondent.
“This massive decline in foreign reserves”, the official said, “has led to an unprecedented depreciation of Pakistan’s currency against the dollar. The dollar on Thursday traded in the open market at Rs 87 in Peshawar.”
“Owing to this single factor, Pakistan’s national debt has increased alarmingly by Rs 900 billion,” the official added. With no Saudi oil facility worth $6 billion in sight and the postponement of the Friends of Pakistan meeting till next month, Pakistan is left with $2.48 billion in real terms despite the recent inflow of $500 million from the Asian Development Bank.
“It is even more shocking to know that in the last two and a half months, commercial banks’ deposits have depleted by Rs 161 billion indicating that the people have withdrawn huge amounts from their deposits and purchased dollars, which has triggered massive demand for dollars.”
Pakistan’s key economic managers are currently out of the country to attend the annual IMF meetings, held on October 12-14, and have not still returned. Adviser to Prime Minister on Finance, Secretary Finance and Governor State Bank of Pakistan are all out of the country.
He said that Saudi Arabia was yet to extend the oil facility, which was due in the first week of September. It is pertinent to mention that Saudi Arabia did not participate in the Friends of Pakistan meeting held in Washington.
Although, Finance Minister Naveed Qamar earlier claimed that the Saudi authorities were working on a package for Pakistan, it has not yet been announced. Two installments of $136 million each from the UAE-based Etisalat Company against the privatisation of the PTCL are now overdue and the government is impatiently awaiting the $272 million payment. However, so far there is no progress on this issue. The government has so far been unable to float the Workers Remittances Bonds worth $750 million to provide the much-needed cushion to the worsening foreign reserves situation.
On the privatisation front, there seems no tangible progress. However, the government claims that some privatisation proceeds amounting to $1.86 billion are in the pipeline. The government had earlier claimed that it will have the inflow of $250 to $300 million as Pakistan Telecommunication Authority (PTA) is going to issue licences to various companies in the first quarter of the current fiscal. So far no progress has been seen on this count.
Musharraf was supporting and allowing attacks by USA but at the same time, we were getting dollars which kept our reserves at 16 billion and Dollar/Re parity at 60 for five years. The intensity of US attacks have increased many times since Mr Zardari became president but we are not getting any dollars.
^ from what i have observed wherever they buy from, hoarding creates a shortage of dollars and the price of the dollar goes up... i think it touched Rs. 80
Why are the reserves going down if there are close to no subsidies for the people anymore? Isn't gillani on record saying that removal of subsidies is causing "mehngai"?
usually, it is the the subsidies that cause govt loss that it has to absorb itself.
Susidies is one thing, import-export trade deficit is another big blow to foreign exchange, with many industrial plants shutting down for loadshedding exports are suffering as well.
