Despite the economic growth and development activities in Pakistan, Bloomberg reported that Pakistan’s dollar reserves are depleting at the fastest rate in entire Asia. Pakistan’s foreign reserves may fall below Cambodia’s foreign reserves it feared.
Cambodia is the economy which is less than a 10th of Pakistan economy’s size, Pakistan’s foreign reserves have come to the point where authorities have to think seriously about it.
According to the report released by International Monetary Fund (IMF), the foreign reserves have dropped by almost fifth during the past year and reach $13.5 billion in February. However, Cambodian reserves increased by a third to $11.2 billion in January.
Previously, there were reports which indicated the continuous drop in foreign reserves, on March 16 it was reported that Pakistan’s foreign reserves plunged to $18.24 billion. According to the insight Securities Pvt. The reserves are expected to drop even further up to $2.2 billion in June.
The head of the economics department at the Lahore University of Management Sciences (LUMS), Turab Hussain said: “The capital inflows are not coming in, the exports are not picking up, Bangladesh’s economy is becoming stronger comparatively.”
The major problem with Pakistan is the balance of payments, the country’s current accounts deficit has inflated by 50 percent during the past 8 months and reached $10.8 billion, the rising imports is also serving as icing on the cake when the economy grows close to 5 percent and Chinese investors are pouring funds into power plants.
The authorities have devalued the currency for the second time in four months fearing depleting reserves but that is not the solution to the problem at all. The data also indicates that Kazakhstan and New Zealand are much smaller economies in size but have more foreign reserves as compared to Pakistan.
Uzair Younus, South Asian director of Albright Stonebridge Group LLC said, “There seems to be no easy fix for this problem. Pakistan has to concentrate on improving the business landscape, attract more Foreign Direct Investment FDI and improve their exports while curbing imports.