KARACHI: Pakistan’s foreign exchange reserves reached a more than two-year high of $16.1 billion as of October 11, the State Bank of Pakistan reported on Thursday.
The reserves jumped by $64 million in the reporting week.The SBP’s reserves rose by $215 million to $11.02 billion, the highest level since April 2022. The SBP’s reserves are enough to cover more than two months of imports.
However, the reserves of commercial banks dropped by $150 million to $5.089 billion.The forex reserves, which were gradually improving, received a significant boost after receiving the first tranche of $1.03 billion from the International Monetary Fund (IMF) under the $7 billion Extended Fund Facility last month.
Furthermore, the reduction in the current account deficit supported by robust remittances, improved exports, and healthy Roshan Digital Account inflows also led to the rise in the forex reserves.
The IMF in its most recent staff report on Pakistan stated that the rebuilding of reserves must continue, aiming to return gross reserves to cover at least three months of imports, supported by disbursements from multilateral and bilateral loans, as well as foreign exchange purchases.
The IMF expects Pakistan’s current account to post a deficit of $3.57 billion in the fiscal year 2025, or 0.9 per cent of GDP.Pakistan’s gross financing requirement for FY25 is $18.8 billion, which is a nine-year low according to IMF data.
The average gross financing requirement over the last nine years has remained $25 billion.The significant fall in gross financing requirement for FY25 is on the back of a contained current account deficit of $3.6 billion and relatively lower repayments in FY25 to the tune of $15.2 billion, according to analysts.
Similarly, over the next three years (FY25-28), the IMF has lowered the gross requirement of Pakistan by cumulative $4.2 billion and over the next two years by $5.2 billion due to an anticipated fall in the current account deficit.