Governor Jameel Ahmad of the State Bank of Pakistan (SBP) said that the nation could start seeing dollar inflows from “next week,” with the expectation that this would help increase the country’s foreign currency reserves.
In his speech to the Federation of Pakistan Chambers of Commerce and Industry, the SBP governor stated, “We are expected to experience inflows from next week forward, which will alleviate strain on our foreign currency reserves.”
With the influx of funds, said Ahmad, foreign exchange reserves, which are now at their lowest level since February 2014, may be replenished and import restrictions can be lifted.
In an effort to stabilise the economy and avoid a balance of payments crisis, Pakistan prohibited the import of all luxury items in May. However, the relevant authorities relaxed import restrictions on several commodities after receiving harsh criticism from industry groups.
Earlier this year, the SBP imposed import limits due to insufficient reserves, much to the dismay of several importers and firms in Pakistan, who claimed these bans as the cause for closing down or drastically reducing operations.
The SBP chairman promised the businessmen that dollar inflows will begin coming in from next week, after which decisions on import limits would be made, notwithstanding the fast depletion of Pakistan’s reserves to less than three weeks of import cover of $4.5 billion as of January 6.
The governor stated “it takes time to validate applications,” in response to complaints from company owners about delays in establishing Letters of Credit (LCs).
He said that commercial banks had asked the regulator to prioritise LCs required for the purchase of food items, medications, and oil, and that the central bank had approved roughly 33,000 LCs with particular regard for raw material imports utilised in commodities which were exported.