Pakistan had only three weeks' worth of import coverage in its foreign exchange

Pakistan had only three weeks' worth of import coverage in its foreign exchange reserves as of January 6, according to data released by the central bank on Thursday.

The State Bank of Pakistan (SBP) stated in a statement that the decrease was brought on by repayment of foreign loans.

According to the bank, commercial banks maintained net foreign currency reserves of $5.8 billion and total liquid reserves of $10.1 billion.

Pakistan's import cost for products was $5.1 billion each month in both November and December, according to the Pakistan Bureau of Statistics, despite recent government efforts to reduce imports.

The primary imports are essential fuels for the energy sector.

The nation is now experiencing a serious cash shortage. The local currency has already been significantly undervalued in comparison to the US dollar and other major currencies due to the declining reserves.

The most concerning issue for the coalition government led by the PMLN that faces a real default risk is how to service foreign debt. There have been several unsuccessful attempts to reopen discussions with the International Monetary Fund (IMF) on the delivery of the following tranche.

The United Arab Emirates (UAE) did, however, agree earlier today to extend a $2 billion loan to Pakistan and provide a $1 billion loan in addition.