Pakistan News / Pakistan suffered the biggest blow in 3 years, all dreams were shattered

Pakistan News: Pakistan, which once made the mistake of considering itself a regional power by sitting in the lap of China and with the help of America, is now badly shaken by the collapse of the walls of its own false confidence. The situation has deteriorated so much that the country's economy has suffered the biggest blow in three years. This economic shock has destroyed all the estimates of Pakistan's plans and foreign policy in one stroke.

Biggest decline in three years

According to Pakistani media reports, the foreign exchange reserves held by the State Bank of Pakistan (SBP) have recorded a record decline of $ 2.66 billion in just one week. In the week ending June 20, this reserve fell to $ 9.06 billion. This is the biggest decline in three years, which was earlier seen in March 2022.

Due to this huge decline, the reserves of SBP have come down to the lowest level in 11 months. Overall, Pakistan now has liquid foreign reserves of just $14.39 billion, of which $5.33 billion is deposited with commercial banks.

Why did it fall so much?

The major reason for this decline has been the compulsion of the government to repay its debt. The Pakistani government (GOP) had to pay foreign debts, especially commercial debts, which directly affected the foreign exchange reserves.

However, the SBP also said that it would soon receive commercial loans of $3.1 billion and multilateral loans of more than $500 million from the government. These funds will be added to the foreign exchange reserves for the week ending June 27.

Will Pakistan be able to achieve the FX target?

SBP Governor Jamil Ahmed said in April this year that the foreign exchange reserves would be increased to $14 billion by June 2025. Earlier it was estimated at $13 billion. However, the current decline has made this target largely impossible.

According to Sana Taufiq, Research Head of Arif Habib Limited, reaching $14 billion by the end of June is difficult, but not impossible. Still, the speed with which the reserves have fallen has exposed Pakistan's weak economic backbone.

Neither China could save it, nor America's support was of any use

Pakistan has long been presenting itself as China's 'economic belt' and America's 'strategic partner', but this latest economic blow has made it clear that neither China could provide any concrete relief in this crisis, nor America provided any major help.

Now Pakistan will have to take serious steps towards self-reliance, otherwise the next blow may inflict an even deeper wound on its system.