SBP’s forex reserves increase by $118m to $10.33bn as of May 2

KARACHI: Pakistan’s central bank’s foreign exchange reserves rose by $118 million to $10.332 billion in the week ended May 2, the State Bank of Pakistan said in a statement on Thursday.

The total liquid foreign reserves held by the country increased by $231 million to $15.483 billion. The reserves of commercial banks also rose by $113 million to $5.15 billion.The data on forex reserves comes as tensions between Pakistan and India, the two nuclear-armed neighbours have escalated following retaliatory attacks after a militant incident last month in occupied Kashmir.

Pakistan anticipates securing a $1 billion loan tranche from the $7 billion bailout programme provided by the International Monetary Fund (IMF). The executive board meeting to review the country’s loan is scheduled for Friday.

In its monetary policy statement released on Monday, the State Bank of Pakistan (SBP) noted that the current account surplus, bolstered by strong remittances and the SBP’s dollar purchases from the currency market, has not only contributed to an increase in foreign exchange (FX) reserves but has also partially mitigated the effects of significant ongoing debt repayments.

The SBP projects that the current account will remain in surplus during the fiscal year 2025. However, net financial inflows have remained weak as of March, primarily due to substantial debt repayments and delays in the realisation of official inflows. Nevertheless, with the anticipated realisation of planned official inflows, the SBP expects its FX reserves to rise to $14 billion by June 2025.

Looking ahead, the SBP believes that this increase in FX reserves will continue into fiscal year 2026, supported by a moderate current account deficit and improved financial inflows. However, the bank also cautions that this outlook carries risks, particularly from the uncertain global economic and trade environment.

Pakistan’s total external debt servicing requirement for the current fiscal year stood at $26 billion, of which $16 billion was expected to be rolled over. Most rollovers have already been secured, and the remaining amounts will be addressed as they come due. From the $10 billion due, $8.5 billion has already been repaid, with the remaining $1.3 billion scheduled for repayment in May and June 2025.