KARACHI: The State Bank of Pakistan purchased $5.9 billion from the interbank market between June 2024 and February 2025 to boost its foreign exchange reserves and meet external debt repayments, according to the latest data from the central bank.
In February, the SBP bought $223 million worth of foreign currency from the market, up from $154 million in the previous month. Analysts noted that the favourable external account position enabled the SBP to intervene in the foreign exchange market, which contributed to building its forex reserves.
The SBP successfully increased its reserves despite external debt repayments, thanks to record remittances and strong exports amid declining commodity prices. Inflows from the International Monetary Fund (IMF) and rollovers from friendly nations played a crucial role in bolstering the reserves. As of May 16, the SBP’s reserves rose to $11.45 billion following the receipt of the second tranche of $1.023 billion from the IMF on May 13 under the $7 billion loan programme. In the reporting week, the SBP’s reserves increased by $1.043 billion.
The total liquid foreign reserves held by the country increased by $1.034 billion, reaching $16.648 billion. However, the reserves of commercial banks decreased by $8 million to $5.202 billion.
On May 9, the IMF completed the first review of the 37-month Extended Fund Facility (EFF) arrangement that the global lender agreed with Islamabad last year. This review led to the approval of a $1 billion disbursement for Pakistan. Additionally, the IMF approved a new loan of $1.4 billion from its climate resilience fund.
In April, the current account surplus dropped to $12 million, a staggering 99 per cent decrease from the month before. The surplus fell by 96 per cent year-on-year. The surplus during the first 10 months of fiscal year 2025 was $1.88 billion, which is a substantial improvement over the $1.33 billion deficit for the same period the previous year.
Brokerage firm Topline Securities, citing the latest IMF staff report, said in a note that Pakistan outperformed on the net international reserves target in December 2024 by a wide margin, with the actual net reserves number arriving at -$9.7 billion against the target of -$12 billion.
“We believe this is on the back of quicker buildup of FX reserves in 1HFY25, and as a result, in line with the trend, the net international reserves target for June 2025 is further tightened to -- $7.45 billion from the earlier target of -$8.65 billion,” it said. “We believe, as a result of this, the FX reserves target for June 2025 is revised up to $13.9 billion from the earlier $12.75 billion,” it added.