The State Bank of Pakistan (SBP) has reported a significant increase in its foreign exchange reserves, with a remarkable boost of $67 million in just one week, bringing the total to $7.7 billion as of October 13, as per data released on Thursday.
Considering Pakistan’s total liquid foreign reserves, the figure stands at $12.9 billion, with the country’s commercial banks holding a total of $5.2 billion in net foreign reserves. Although the central bank did not give a specific reason for this recent increase in reserves, it indicates a continuation of the positive trend that began in July.
In July this year, the State Bank of Pakistan’s reserves increased substantially when Pakistan received an initial tranche of about $1.2 billion from the International Monetary Fund (IMF) after Pakistan approved a new standby arrangement of $3 billion. Additionally, Pakistan received financial aid from friendly countries like Saudi Arabia and the United Arab Emirates.
However, despite these encouraging developments, central bank reserves are under pressure due to the need to meet debt repayment commitments, increased import payments following the easing of sanctions, and a significant absence of fresh inflows.
The central bank did not elaborate on the exact factors driving this rise in reserves, but it is clear that both positive and challenging economic factors have contributed to the situation. This increase in reserves follows a $31 million increase in reserves by the Central Bank of Pakistan in the previous week, and reflects a positive trend in Pakistan’s economic situation.
The central bank governor noted that foreign exchange buffers are improving with an increase in foreign exchange reserves and a reduction in foreign exchange liabilities. Reserve building is supported by non-debt-generating funds, and the forward book target agreed with the IMF has already been met. Despite ongoing challenges, Pakistan’s foreign exchange reserves are showing signs of resilience and growth.