Forex reserves at alarmingly low levels
Pakistan’s Forex reserves fell to an alarmingly low level of $14.406 billion. State Bank of Pakistan has revealed decreases of 3.3% in one week. Debt consolidation is the main reason behind such a decline. Pakistan has recently paid $109 million installment to International Monetary Fund (IMF).
Apart from debt consolidation, low foreign investment is another main factor behind decline in Forex reserves. SBP documents reveal that official foreign reserves are below $10 billion now. This means that country face severe problems in Balance of Payments in near future.
Pakistan has to make several external debt repayments in November 2012. Some of the major payments include a $106 million SDR payment and payments to International Monetary Fund (IMF). Under these circumstances, Forex reserves will deplete further and will put more pressure on balance of payments.
Situation is not expected to ease even in the next year. During FY 2013 Pakistan has to make debt repayments of almost $6 billion. Draining out such a huge sum from national exchequer will put more pressure on Forex reserves.
Apart from depleting Forex reserves, debt repayments are expected to exert pressure on local currency as well. Pakistani Rupee has already depreciated by 10% against the US dollar over past two weeks.
The only ray of hope for economy is Coalition Support Fund. Pakistan is expecting to receive $600 million from the fund by November 2012. If received, this amount will provide just a marginal relief to the economy.
The only instrument to improve the situation is to get fresh Forex reserves through FDI. But no major FDI is in sight due to deteriorating law and order condition of the country. Remittances by expatriate Pakistanis can be another option but Government is not pursuing this tool seriously. Under the circumstances it seems inevitable that Pakistan will be looking for some bailout package by the end of next year.
In my humble opinion,the Govt must focus on remittences by expatriates Pakistanis.It is hundred times better & fruitfull for our economy rather then dependence on Coalition Support Fund.Secondly the most important for us is to establish rule of Law by any means in shape of Restoring Law & order in the country from one corner to the other.We must confess that in the present World,we are the only Country/Nation,where any person from any corner of the World without any legal documents enjoys the free travel,free meetings with anyone,resulting in shape of present scenario which has destroyed our National Image,Economy,Law & order.Lack of discipline/Co ordination amongst the institutions is another natinal set back.Almost each & every institution is interfering in the domain of others.Weaks are accountable while power full are at liberty.Media should respect the National cause & reflect the general public grievences impartially rather than becoming a party.No doubt it has played an important role,but black sheeps are also in abundant within them.We are the superior Nation as a Muslim,Talented as Scholars,Engineers,Doctors,Scientists & peace loving people.Present situation has been imposed on us by the Regional International Players.All responsibility lies upon them if an International Impartial Truth finding Commission comes forward.We are rich by resources,but hurdels by sponsored miscreants in many shapes,under various names & designations like Nawab,Sardar,Wadera,Choudhary & some Other operational but hidden forces are there.All above said should be cornered by Law.Should be stepped down immediately.There umbrellas should be removed now.It is a crucial time for our Nation & in the presence of these horrible elements,we will not be able to compete the others.Reversly we will be upon their mercy like baggers,& baggers will not be having the right of choosers.We must realise that God forbid if anything happens tomorrow even in shape of default,where we will be.Brother commanding from other countries & surrendering our nationality should respect us.Under the constitutionl amendments & Supreme Court of Pakistan Judgement they ve no right to interfere & the Nation should be alert from such……
Ve lot to comment but on another occassion.May ALLAH bless all of us with his kindnesses.Thanks to all.
I agree with Rahmat. Ex Pat contributions would be a much better solution. People need to remember where they came from and give back. There are lots of very successful Pakistani businessmen that do not seem to care about what is going on in their country. They are happy to live in the lap of luxury in their adopted country while others struggle at home. This goes for many Ex Pats i am not just picking on Pakistan.