SBP forex reserves fall by $152m to $11.1bn amid debt payments

KARACHI: Pakistan’s central bank foreign exchange reserves dropped by $152 million to $11.098 billion during the week ended March 7 due to external debt repayments, the State Bank of Pakistan said in a statement on Thursday.

However, the total liquid foreign reserves held by the country increased by $55 million to $15.929 billion. The reserves of commercial banks also rose by $207 million to $4.831 billion.

The SBP in its monetary policy statement issued on Monday noted that the current account turned to a deficit in January due to a rise in imports. However, robust workers’ remittances, along with relatively moderate growth in exports, proved instrumental in financing the elevated imports. The SBP said net financial inflows remained weak, mainly due to a shortfall in planned official inflows. At the same time, the majority of debt repayments for the year have already been made. With lower debt repayments and expected realisation of planned official inflows in the remaining months of FY25, the SBP’s FX reserves are likely to reach above $13 billion by June 2025. Going forward, the central bank emphasised the importance of strengthening external buffers in the presence of heightened global economic uncertainty.

Governor State Bank of Pakistan Jameel Ahmad told analysts in a briefing following the rate cut decision that the central bank has met the International Monetary Fund’s net international reserves (NIR) target of December 2024 by a significant margin and anticipates achieving the June 2025 target as well.

The IMF’s review on the $7 billion Extended Fund Facility is expected to conclude this week. If approved by the IMF’s board, the review could release a $1 billion tranche of funding for the cash-strapped country.

The SBP noted during the remaining period of FY25, repayments will total around $3 billion, net of rolled over and refinanced amounts. Inflows that were previously planned are expected to materialise in the fourth quarter of FY25, with some of these inflows contingent on a successful IMF review.

According to the governor, the government is avoiding external borrowing to secure better terms. He anticipates further developments in this regard in the coming months.