Fact check:
Pakistan’s total reserves stand at $17bn not $22bn
By Ariba Shahid
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number of viral tweets have been going around claiming that at the time of Prime Minister Imran Khan’s departure from the PM Office, the reserves stood at $22 billion. However, total reserves with the State Bank of Pakistan (SBP) and banks, stand at $17bn. Farrukh Habib, ex Minister of State for Information and Broadcasting and Central Secretary Information for Pakistan Tehreek -eInsaaf shared an image by Startup Pakistan. He captioned it saying, “The first Prime Minister in the history of the country who left $22 billion in the national treasury. Excellent example of excellent performance.” The tweet and post are wrong as per data available from the SBP the total liquid foreign reserves held by the country stood at $17,476.9 million as of April 1, 2022, the lowest level since June 2020. Total Liquid FX Reserves include net reserves held by banks and net reserves held by SBP. To explain this in simple terms, the net reserves held by the SBP is like money that is in the government’s wallet. Net reserves with banks, is like money that is in the wallets of banks, this is not money owned by the government. Moreover, sometimes your friends give you money in order to make your wallet look thick
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and institutions feel more comfortable dealing with you because they think you have money. This money, however, is just for show and cannot be used. An example of this is amounts received from Saudi Arabia, UAE, and China. During the week ended in April 1, 2022, SBP reserves decreased by $728 million to $11,319.2 million, largely due to debt repayment and government payment pertaining to settlement of an arbitration award related to a mining project. Total reserves are down by $1,078 million. A breakdown of this shows that SBP reserves stand at $11.3 billion, and are down by $728
million. Bank reserves are down by $350 million, clocking in at $6.2 billion. The total liquid FX reserves have declined $1.078 billion over last week which is equivalent to a 5.8% decline week on week. The import cover has declined from 1.82 months to 1.71 months based on average imports of the last 12 months.
Why the confusion?
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he $22bn figure being quoted on the internet is based on the month end level data released by the SBP for the month of February, the last available month for the data. However, the SBP also releases week-end levels of the reserves. The data is available for the week ended 4 March, 11 March, 18 March, 25 March, and 1 April, 2022. Moreover, it is also important to note that not all that is in the reserves can be used by the government. For instance, out of the $17.477 bn reserves the country had on April 1, 2022; $6.157 are reserves with the bank, and the remaining are with the SBP. The reserves include $1.4bn raised through Naya Pakistan Certificates, Treasury bills, and Pakistan Investment Bond Holdings. These are encumbered reserves. An encumbrance is a restriction placed on the use of funds. The concept is most commonly used in governmental accounting, where encumbrances are used to ensure that there will be suffi-
