IMF unimpressed, Pak's foreign reserves drop to precarious level

Pakistan's foreign exchange reserves held by the central bank decreased by 16.1% to $3.09 billion in the week ending Jan 27, the State Bank of Pakistan (SBP) said on Thursday, which analysts said covers less than three weeks of imports. The central bank said in a statement that the drop in reserves was due to external debt repayments. Reserves held by commercial banks stood at $5.65 billion, taking total liquid reserves in the country to $8.74 billion, SBP added. Local investment firm Arif Habib Limited (AHL) calculated that the reserves are at their lowest since February 2014 and now only cover 18 days' worth of imports.

As per The Express Tribune report, Cash-strapped Pakistan on Tuesday held talks with the IMF in a bid to unlock funds from a $7 billion bailout designed to ward off economic meltdown. The talks, to continue through Feb 9, are meant to clear the IMF's 9th review of its Extended Fund Facility, aimed at helping countries with balance-of-payments crises. The lender asked Pakistan to plug unbudgeted Rs675 billion power subsidies with a mix of electricity tariff increase and other revenue enhancing measures, while finding serious deficiencies in the revised ‘Circular Debt Management Plan’ (CDMP) of Rs952 billion.