February 22, 2024

Financial Ministry, SBP: Economic issues are “temporary, being firmly addressed”


ISLAMABAD: In a joint statement, the Finance Ministry and State Bank of Pakistan (SBP) guaranteed that the nation’s issues were transient and that they were being aggressively addressed. According to the joint statement, Pakistan’s foreign exchange reserves have decreased since February as a result of outflows of foreign currency outpacing inflows.

On the other hand, the inflows primarily consist of multilateral loans from the World Bank, Asian Development Bank, International Monetary Fund (IMF), bilateral loans and deposits from China, Saudi Arabia, and the United Arab Emirates, as well as commercial borrowing from foreign banks and through the issuance of Sukuks and Eurobonds.

The statement said that the next IMF program review’s completion delay was a major factor in the lack of inflows. While this has been happening, on the side of outflows, debt servicing on foreign borrowing has persisted as these debts’ repayments have been due over this time.

The currency rate has been under a lot of pressure as well, according to the statement, particularly since mid-June. It attributed the depreciating rupee to a number of factors, including a general tightening of the US dollar, an increase in the current account deficit (which was made worse by a large energy import bill in June), a decline in foreign exchange reserves, and worsening sentiment due to uncertainty surrounding the IMF program and domestic politics.

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