Pakistan’s foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased by 16.1 per cent to $3.09 billion in the week ending January 27, 2023, the central bank said on Thursday.

The update from the SBP comes on the same day when the rupee fell to a historic low against the dollar in the inter-bank market as Pakistan grapples with lower inflows and falling reserves.

Pakistan is gripped by a major economic crisis, with the rupee plummeting, inflation soaring and energy in short supply. Prime Minister Shehbaz Sharif for months held out against the tax rises and subsidy slashing demanded by the International Monetary Fund, fearful of backlash ahead of elections due in October.

The SBP reserves, which stood at nearly $18 billion at the start of the 2022, have undergone significant depletion, underscoring the urgent need for Pakistan to complete the next review of the International Monetary Fund (IMF) programme.

The country is currently holding talks with the IMF to restart the stalled bailout programme and unlock funds from a $7 billion bailout. The talks, which would continue through Februar 9, are meant to clear the IMF’s ninth review of its Extended Fund Facility.

The local currency closed at Rs271 after declining by Rs2.53 or 0.93% against the US currency, the State Bank of Pakistan reported. The currency has depreciated by 24.51% during the ongoing fiscal year against the greenback.

“We’re at the end of the road. The government has to make the political case to the public for meeting these (IMF) demands,” former World Bank economist Abid Hasan told AFP earlier this week.

“If they don’t, the country will certainly default and we’ll end up like Sri Lanka, which will be even worse.”

Investment firm Arif Habib Limited (AHL) calculated that the reserves are at their lowest since February 2014.