Forex reserves held by SBP rise $77 million to $7.3 billion

KARACHI: Foreign exchange reserves held by the central bank increased by $77 million to $7.257 billion in the week ending November 24, the State Bank of Pakistan (SBP) said on Thursday.

The country's total reserves rose by $91 million to $12.393 billion. The reserves of commercial banks also increased by $14 million to $5.136 billion. The SBP did not give any reason for the rise in its reserves, but analysts believe that the central bank may have bought dollars from the market to boost its holdings.

The latest forex reserves data came after Saudi Arabia extended the term of a $3 billion deposit it placed with the SBP for another year. The deposit, which was due to mature on December 5, was made by Saudi Arabia as a loan to Pakistan in 2021 and rolled over in 2022.

"The extension of the term of the deposit is a continuation of the support provided by the Kingdom of Saudi Arabia to the Islamic Republic of Pakistan, which will help to maintain the foreign currency reserves of Pakistan and contribute to the economic growth of the country," the SBP said in a statement on Wednesday.

Analysts welcomed the move, saying that it would ease the pressure of debt repayments and show confidence in the country's economy.

"It's good for Pakistan, it would reduce the pressure of repayments and signal confidence in the country," said Samiullah Tariq, the head of research at Pak-Kuwait Investment Company.

Pakistan has been facing challenges in meeting its external debt obligations and maintaining adequate foreign exchange reserves, which are enough to cover less than two months of imports. The government also faces difficulties in securing new foreign loans and accessing international markets.

Analysts said that as the government nears its gross financing needs, the extension of the Saudi deposit strengthens the agreement with the International Monetary Fund (IMF). This would help clear the way for the next $700 million tranche under the standby arrangement, which would bring the total amount disbursed by the IMF to $1.9 billion if approved by its board next month.

Securing external financing has been identified by the IMF as a critical requirement for a $3 billion loan deal reached with Pakistan in July, when the country was on the brink of a balance of payments crisis and sovereign debt default. Pakistan is expected to receive funding worth $1.5 billion from international lenders, mostly multilateral partners, after the IMF approves the next loan tranche.