SBP forex reserves rise to $9.4bn

By Our Correspondent
July 19, 2024
The Bank of Pakistan building seen in this undated image.— Facebook@StateBankPakistan/file
The Bank of Pakistan building seen in this undated image.— Facebook@StateBankPakistan/file

KARACHI: Pakistan’s foreign exchange reserves held by the central bank increased by $19 million to $9.42 billion in the week ending July 12, the State Bank of Pakistan reported on Thursday.

The country’s total foreign exchange reserves rose by $59 million to $14.704 billion. The reserves of commercial banks increased by $40 million to $5.280 billion. Last week, Pakistan achieved a breakthrough by signing a new 37-month $7 billion Extended Fund Facility (EFF) with the International Monetary Fund (IMF). This significant achievement comes after the stabilization measures taken by the government along with the successful conclusion of the last standby arrangement (SBA) of $3 billion back in April this year. The deal is now subject to approval by the IMF Executive Board.

According to the latest Moody’s report, the new IMF programme will improve Pakistan’s (Caa3 stable) funding prospects. “The programme will provide credible sources of financing from the IMF and catalyze funding from other bilateral and multilateral partners to meet Pakistan’s external financing needs,” it said.

“However, the government’s ability to sustain reform implementation will be key to allowing Pakistan to continually unlock financing over the duration of the IMF programme, leading to a durable easing of government liquidity risks,” it added.

The rating agency, citing the IMF report, which was published in May said Pakistan’s external financing needs is about $21 billion for fiscal 2025 (ending June 2025) and about $23 billion for fiscal 2026-27. Pakistan’s foreign exchange reserves of $9.4 billion as of July 5 is well below its needs, it said.Pakistan’s external position remains fragile, with high external financing requirements over the next three to five years. The country is vulnerable to policy slippages. Weak governance and high social tensions can compound the government’s ability to advance reforms, jeopardizing its ability to complete reviews under the IMF programme and unlock external financing, it noted.