KARACHI: The State Bank of Pakistan (SBP) has purchased nearly $4 billion from the domestic market in five months (June to Oct 2024) to build up the country’s foreign exchange reserves.
Despite the challenges posed by heavy debt servicing, the SBP remains committed to bolstering foreign exchange reserves. By acquiring excess US dollars from the domestic forex market, the SBP aims to ensure the reserves are maintained at a sustainable level, helping to stabilize the economy and safeguard against external shocks.
According to the latest data, the SBP’s net foreign exchange interventions totaled $3.8 billion between June, and October 2024. October saw the highest purchase, with over $1 billion acquired, followed by $946 million in September, $569 million in August and $722 million in July. The SBP’s intervention in June was $573 amounted to $569 million, as part of its ongoing efforts to build and stabilize the country’s foreign exchange reserves.
Analysts said that combined with higher home remittances inflows, surplus current account and this strategic action led to $ 2.1 billion increase in the country’s foreign exchange reserves, with the remaining amount allocated towards managing the country’s debt repayments.
“This proactive approach is critical as the country continues to navigate economic pressures, and underscores the SBP’s focus on building resilience amid global financial uncertainty,” they added.
State Bank Governor Jameel Ahmed, has already expressed confidence that the SBP’s foreign exchange reserves will continue to grow, projecting a rise to $13 billion by June 2025, up from $11.3 billion in January 2025.
During a recent monetary policy briefing, the Governor SBP provided insights into Pakistan’s debt servicing, revealing that the total debt servicing for FY25 is estimated at $26.1 billion. Of this, $16 billion has been rescheduled or rolled over, while $10.1 billion remains payable.
He further informed that Pakistan has already repaid $6.4 billion in the first six months of the fiscal year (June–January), with an additional $3.7 billion expected to be paid between in next five months (February and June 2025).
Despite the substantial debt servicing obligations in the coming months, Governor Ahmed reassured that the SBP’s reserves will continue to grow, reflecting the SBP’s resilience and strategic efforts to bolster Pakistan’s financial stability. It’s worth noting that Pakistan’s external sector is showing positive performance, with a surplus current account balance of $1.2 billion, record $17.8 billion home remittances, up by 33 percent, and a 7 percent rise in exports during the first seven months of the fiscal year.
Copyright Business Recorder, 2025
Comments