SBP reserves inch up by $13 million to $8.057 billion

KARACHI: The foreign exchange reserves held by the central bank increased by $13 million to $8.057 billion in the week ending February 9, the State Bank of Pakistan (SBP) said on Thursday.By our correspondent

KARACHI: The foreign exchange reserves held by the central bank increased by $13 million to $8.057 billion in the week ending February 9, the State Bank of Pakistan (SBP) said on Thursday. The country’s total reserves rose by $52 million to $13.149 billion. The reserves of commercial banks also increased by $39 million to $5.093 billion. The SBP’s reserves are enough to cover around two months of imports. Although, the SBP didn’t provide a reason for the nominal increase in reserves in its weekly statement, the uptick in forex is a good development at a time when Pakistan is dealing with a new level of political unrest in the wake of the unexpected results from last week general elections, in which no party was able to gain a clear majority.

The shocking election outcome occurred while Pakistan was engulfed in an economic crisis. The annual rate of inflation reached 28 percent in January. The nation's debt load increased quickly, and last year's near collapse was only prevented by a $3 billion bailout from the International Monetary Fund.

Moody’s stated that the political uncertainty in Pakistan was a credit negative. Pakistan faced significant macroeconomic challenges, particularly its very weak external and liquidity position, it said. Nonetheless, the SBP was optimistic that strong foreign inflows and an improved current account position would result in a rise in forex reserves. The total external financing requirement for FY24 was $24.5 billion, out of which most of the amount had already been paid or rolled over, according to the SBP.

The SBP estimated further rollovers worth $5 billion, and the net payable in FY24 stood at $5 billion. The reserves were sufficient to cover the coming debt obligations. “One major challenge that lay ahead for the new government is restoring confidence in the economy by negotiating a deal with the IMF and containing high inflation,” Alpha Beta Core said in a report. "Given the possible government setup, implementing policies would be a challenge on its own with responsibilities to lead the country towards economic stability,” it added.