FY24: forex reserves record increase of over $5bn on foreign inflows

KARACHI: The country’s total liquid foreign exchange reserves recorded an increase of over $5 billion during the last fiscal year (FY24). According to the State Bank of Pakistan’s statistics, Pakistan’s foreign exchange position has improved during the last fiscal year supported by arrival of inflows from the international financial and multilateral agencies.

Pakistan during the fiscal year availed a short-term Stand-by Arrangement program to build the depleting foreign exchange reserves, while China has also rescheduled a $2 billion loan to support Pakistan’s economy. According to SBP, the country’s total liquid foreign exchange reserves rose to $14.573 billion mark as of June 28, 2024 compared to $9.160 billion as of June 28, 2023, showing an increase of $ 5.413 billion in FY24.

Most of the surge was witnessed in the reserve held by the SBP. With support of IMF loan and rescheduling of other loans, SBP’s foreign exchange reserve mounted up by $5 billion during the last fiscal year. With the current surge, SBP’s reserves reached $9.389 billion at the end of June 2024, up from $4.445 billion at the end of June 2023.

SBP-held foreign exchange reserves increase $494mn, now stand at $9.39bn

Analysts said that the SBP’s reserves current level of $9.4 billion is marking the highest level since July 7, 2022.

Net foreign reserves held by commercial banks also increased by $ 468.6 million during the FY24. Commercial bank’s reserves stood at $5.183 billion as of June 28, 2024 compared to $4.715 billion as of June 28, 2023.

In July 2023, the IMF approved a 9-month SBA program for Pakistan worth SDR 2.250 billion or about $3 billion to support Pakistan’s economic stabilization program.

The arrangement was approved at a challenging economic environment, when the country was facing challenges like large fiscal, high external deficits, rising inflation and lower foreign exchange reserves.

First tranche of $1.2 billion was arrived on July 13, 2023. Second tranche of some $700 million was received in January 2024 following the successful completion of the first review and the third and last tranche of SBA amounted to $1.1 billion released on April 29, 2024, bringing total disbursements under the arrangement to about $3 billion (SDR 2.250 billion).

In addition, China had rolled over a $2-billion loan to Pakistan in February 2024. The $2-billion Chinese loan was due in March 2024, but the Pakistan’s extended for one year.

Meanwhile, on a weekly basis during the last week of FY24 ended on June 28, 2024, SBP reserves increased by $ 494 million to $ 9.389 billion due to official inflows from multilateral agencies. On completion of the short-term SBA program, Pakistan is negotiating with funds for a long-term loan programme worth $6 to $8 billion to achieve macroeconomic stability in the country. The Finance Minister Muhammad Aurangzeb in a recent interview has confirmed that Pakistan is likely to reach a staff level agreement with the IMF during this month.

Copyright Business Recorder, 2024