New Delhi: Despite support from the International Monetary Fund (IMF), Pakistan is currently grappling with declining foreign exchange reserves. The IMF loan of USD 1,166 million under its Extended Fund Facility allowed the country's Forex reserves, which are maintained by its central bank, to increase to USD 8.7 billion at the beginning of the month after falling below USD 8 billion in August (EFF). However, the nation's reserves once more decreased to USD 8.6 billion for the week ending September 9 - down USD 176 million.
The decrease in foreign exchange reserves was brought on by external debt and other payments. Although the State Bank of Pakistan's most recent data showed that the much-needed reserves are still above the USD 8 billion barrier, policymakers are concerned that they have begun to dwindle. SBP had more than USD 16 billion in reserves as of January this year.
As per early accounts, Pakistan's devastating floods may have cost more than USD 40 billion in losses. Importantly, the floods have destroyed large areas of crops, causing a severe food scarcity and an increase in price. As per latest comments made by Pakistani Prime Minister Shehbaz Sharif, the country's economic situation was already dire when the coalition led by the Pakistan Muslim League-Nawaz (PML-N) assumed power in April. The nation was already experiencing a severe heatwave before the floods, which significantly hurt the agricultural industry. When compared to August of the prior year, the price of food in Pakistan increased by 29.53%. The analyst stated that the impact of the floods has not yet been completely felt and that Pakistanis should be ready for worse.
After approving a USD 6 billion loan deal in July 2019, the IMF put the programme on hold in 2020. A USD 1.17 billion loan, however, has just been used to resurrect the initiative. Along with the IMF, a few other nations have stepped up to assist the cash-strapped nation, including China, Saudi Arabia, the United Arab Emirates, and Qatar.
The situation is difficult due to Pakistani politics as well. Despite many experts highlighting the necessity of it, Islamabad has refused to restore trade with India. not only that, but It has also rejected requests from assistance organisations to purchase supplies from India. It also rejected Bangladeshi aid last week.
In his remarks to a convention for lawyers, Sharif added, "Even friendly countries think we're beggars." Today, he said, "when we travel to any friendly nation or call a friend, they assume we have come to ask for money."
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