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Pakistan’s foreign reserves dropped by $584 million, a worrying trend that brought them to their lowest point since April 2014.
The State Bank of Pakistan (SBP) announced on Thursday that its holding reserves decreased by $584 during the week ending December 16 to total $6.1 billion.
In contrast to the sharp decline in SBP-held reserves, commercial banks’ net reserves increased by $13.7 million, bringing their total reserves to $5.9 billion.
The total foreign exchange reserves decreased overall by $570 million to $12 billion throughout the course of the assessment period.
There are worries that Pakistan may not be able to fulfill its external obligations for the fiscal year 2023 as a result of the FX reserves decreasing to critically low levels.
The SBP governor has, however, consistently voiced confidence in the ability of the nation to repay the entire $23 billion due in FY23.
In July to November, Pakistan’s current account deficit decreased by 57% YoY.
It is significant to note that Pakistan’s current account deficit has steadily decreased over the first five months of the current fiscal year, which is encouraging for the country’s dwindling reserves.
According to the SBP, during the first five months of the current fiscal year, Pakistan’s current account deficit (CAD) decreased by 57% on an annual basis.
Remittance inflows have decreased
The inflows of remittances for the first five months of FY23, however, showed a steep drop trend when compared to the same period last year, coming in at $12 billion this year versus $13.3 billion.