Foreign exchange reserves held by the State Bank of Pakistan (SBP) fell another $294 million to a highly critical level of $5.82 billion, data on Thursday showed. This is the lowest level of SBP-held reserves since April 2014.

Total liquid foreign reserves held by the country stood at $11.71 billion. Net foreign reserves held by commercial banks stood at $5.89 billion.

“During the week ended on Dec 23, 2022, SBP’s reserves decreased by $294 million to $5.82 billion due to external debt repayment,” said the SBP.

Last week, foreign exchange reserves held by the SBP had fallen $584 million to $6.12 billion.

SBP’s level of foreign exchange reserves, which stood at nearly $18 billion at the start of the year but has undergone significant depletion during the last 12 months, underscores the urgent need for Pakistan to complete the next review of the International Monetary Fund (IMF) programme.

As of now, talks on the ninth review seemed to have stalled over some prior conditions of the Washington-based lender.

At the same time, the country has also failed to secure much-needed funding from friendly nations.

The struggle has left policymakers in Pakistan scrambling to arrange foreign exchange amid heightened worries over the country’s debt payments and ability to finance imports.

However, Finance Minister Ishaq Dar reiterated on Wednesday that “there is no chance that Pakistan will default”, while admitting the country’s economy remained in a “tight spot”.

“Conditions are tight, but Pakistan will move forward. Pakistan will not default,” he said. “I admit that we do not enjoy the same level of foreign exchange reserves ($24 billion) we left back in 2016. But that is not the government’s fault, the fault is in the system and we must ensure that every stakeholder takes part in carrying the country forward.”

With depleting reserves, the SBP’s announcement of rolling back import restrictions it imposed in May and July 2022 surprised analysts.

However, it advised authorised dealers to actively engage with all their customers to process their requests, keeping in view the customers’ risk profile and liquidity conditions prevailing in the foreign exchange market.

The central bank added that ADs may prioritise or facilitate imports under essential imports, energy imports, imports by export-oriented industry, imports for agriculture inputs, deferred payment / self-funded imports and imports for export-oriented projects near completion.