KARACHI: The State Bank of Pakistan’s foreign exchange reserves have surpassed the $10 billion mark, reaching two-and-a-half-year high level following the recent disbursement of a loan tranche from the International Monetary Fund (IMF).
On September 25, the IMF’s Executive Board approved a 37-month Extended Arrangement under the Extended Fund Facility (EFF) for Pakistan, totaling approximately SDR 5.32 billion (about $7 billion). As part of this agreement, the IMF also authorized the immediate release of the first tranche, amounting to SDR 760 million (approximately $1 billion). Consequently, Pakistan received $1.03 billion last Friday, bolstering its foreign exchange reserves.
According to the SBP’s weekly report released on Thursday, with the arrival of IMF inflows the country’s total liquid foreign reserves increased by $1.11 billion, reaching $15.983 billion as of September 27, 2024, compared to $14.873 billion a week earlier. This marks the highest level of reserves since June 2022.
Pakistan receives first tranche of $1.03bn from IMF, says SBP
During the reviewed week, the SBP’s reserves rose by $1.168 billion, climbing from $9.533 billion to $10.702 billion mark. This boost is primarily attributed to the $1.027 billion received from the IMF under the EFF program, making it the highest level of SBP’s reserves since April 2022.
In contrast, net foreign reserves held by commercial banks experienced a slight decline, dropping by $58 million to $5.281 billion, down from $5.34 billion the previous week.
Economists said that this significant increase in reserves signals a positive step for Pakistan’s economy, providing a buffer against external pressures and enhancing financial stability. Despite the massive external debt servicing, the SBP’s foreign exchange reserves are in its comfort zone and as per projection, expected to reach $ 13 billion mark by the end of FY25.
For FY25, Pakistan’s external debt obligations amounted to $26.2 billion including $ 4 billion of interest, of which $12.3 billion expected to rollover. Additionally, around $4 billion in bilateral commercial loans will be repaid or refinanced, bringing the total rollover/refinanced amount to $16.3 billion. Some $1.7 billion has already been repaid, leaving $8.3 billion still payable for the rest of FY25.
Copyright Business Recorder, 2024
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