Governor of the State Bank of Pakistan (SBP) Jameel Ahmad expressed hope on Wednesday that the situation of Pakistan’s foreign exchange reserves will improve as the country is anticipated to receive capital inflows in the coming days.
“We are expecting inflows from next week onwards, which would reduce pressure on our foreign exchange reserves,” the SBP governor said.
Ahmad reaffirmed his commitment to addressing the concerns of manufacturers and claimed that the nation’s foreign exchange reserves have reached very low levels. But as projects in the pipeline start to take shape, he predicted, “we will see a boom in reserves, which will increase our ability to support businesses.”
According to the most recent SBP data, the central bank’s foreign exchange reserves dropped significantly by $1.23 billion, to a critically low level of $4.34 billion. SBP’s reserves are at their lowest point since February 2014.
The country held $10.19 billion in liquid foreign reserves, and commercial banks kept $5.85 billion in net foreign reserves, according to Brecorder.
To the dismay of many importers and firms in Pakistan, who claimed these limits as the cause for closing or curtailing operations, the SBP restricted imports earlier this year due to the low level of reserves.
According to Ahmad, the SBP facilitated shipments under the headings of necessities, energy, industries focused on exports, agricultural inputs, deferred payment / self-funded imports, and imports for projects focused on exports that were almost finished.
Prior to this, the central bank made the decision to remove import restrictions beginning on January 2, 2023.
“Our capacity to export will build up only after we complete export-oriented projects, thus we have facilitated the timely completion of these projects,” he said.
“We want to facilitate all the industries, however, we can only do so under our given capacity of inflows. We do not produce dollars locally, they come through exports, remittances, and inflows from lenders,” said Ahmed.
“We are focusing on improving our capacity, and are also taking administrative intervention to bring our imports on a reasonable level,” he added.
The SBP chief said evaluating the Letter of Credit (LC) is a time-consuming exercise. “We have cleared 33,000 LC cases,” he said.
He added that steps had been done to control the current account deficit and that the central bank was aware of issues facing the business community.
The governor stated that an action plan in this regard will soon be launched after the SBP carefully evaluates the business community’s ideas.
He assured the business community that the central bank will ensure the approval of 365 days or over LCs from banks. “Similarly, if you have arranged a project loan, and yet the LCs are not being opened, the SBP will ensure it,” he said.
The SBP had recommended banks to compel the retention of 35% of their export receipts in special foreign currency accounts in order to encourage IT companies and independent contractors to bring their foreign exchange earnings into the nation.
“We are hopeful that the problems of the IT sector will be addressed, and as a consequence, our exports from the IT sector will increase,” said Ahmed in his address.
