SBP reserves on the mend, second consecutive rise by $65.6mn to $3.25bn

February 23, 2023 (MLN): The foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $65.6 million or 2.05% WoW to $3.25 billion during the week ended on February 17, 2023, marking the second consecutive increase on weekly basis, according to the data released by the central bank on Thursday.

Similarly, the country's total reserves rose by $24.3mn or 0.27% WoW to $8.72bn.

On the other hand, the reserves held by commercial banks saw a decrease of $41.3mn or 0.74% WoW to clock in at $5.46bn.

It is important to mention that SBP reported an increase in foreign exchange reserves of $276mn for the past week. This marked the first increase in reserves following three consecutive weeks of decline.

However, the central bank's reserves, which stood at approximately $18 billion at the onset of 2022, have experienced a significant reduction in recent months, emphasizing the critical importance for Pakistan to complete the next review of the International Monetary Fund (IMF) program.

The current reserves level of less than one month of import cover is a serious concern for the country's economic stability. Hence, it is imperative for Pakistan to continue its efforts in improving its financial situation.

The increase in foreign exchange reserves is undoubtedly a positive development, but more substantial measures are necessary to ensure sustained economic growth.

Pakistan must work closely with the IMF to secure much-needed funds and resources to support its economy. This approach is the only viable option to overcome the challenges faced by the country's economic landscape.

Taking the bold step, President Arif Alvi on Thursday granted approval for the Finance Supplementary Bill 2023, as per the provisions of Article 75 of the Constitution of Pakistan.

This important development marks a significant step forward in the country's economic policy and represents a critical milestone in the government's efforts to unlock the IMF program. 

Meanwhile, the central bank is also expected to raise interest rates in an off-cycle review this week, as the country seeks to repair its finances and secure a loan from the fund.

These decisions, undoubtedly, were the most difficult decisions for the coalition government in the political landscape of Pakistan but much needed to close the deal with the fund.

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