SBP forex reserves rise by $112m to $9.4bn

KARACHI: The State Bank of Pakistan’s foreign exchange reserves climbed by $112 million to $9.4 billion in the week ending August 23, according to a statement issued on Thursday.

The country’s foreign exchange reserves increased by $109 million to $14.78 billion. However, commercial bank reserves declined by $3 million, to $5.37 billion.The SBP has enough reserves to handle fewer than two months of imports.

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The decrease in the current account deficit, aided by higher remittances and exports, resulted in rise in forex reserves.Pakistan’s current account deficit fell in July FY2025 as remittances increased and the primary income balance improved. The deficit reduced to $162 million, down 78% from the previous year and 48% from the prior month.

The repatriation of earnings and dividends from foreign interests in Pakistan climbed dramatically to $139 million in the first month of the current fiscal year, up from $2.2 million in the same time previous year.

Pakistan is attempting to obtain final clearance from the International Monetary Fund’s executive board for a fresh $7 billion credit package. This permission is being delayed owing to awaiting confirmation of debt rollovers and bridging the country’s external funding need.

Pakistan is also looking for almost $4 billion in loans from Middle Eastern banks, with Saudi Arabia’s rollover of its prior debt still outstanding. Negotiations are continuing to extend Saudi Arabia’s oil funding facility.

According to recent reports, Saudi Arabia has made a bid for the Reko Diq project, which, if accepted by Pakistani officials, may permit both debt rollovers and extra finance.

Moody’s Ratings raised Pakistan’s ratings to Caa2 on Wednesday, noting improving macroeconomic conditions and substantially improved government liquidity and external situations, which had previously been very poor.

“There is now greater certainty on Pakistan’s sources of external financing, following the sovereign’s staff-level agreement with the IMF on 12 July 2024 for a 37- month Extended Fund Facility (EFF) of $7 billion,” according to a statement issued by Moody’s.

“We expect the IMF board to approve the EFF in the next few weeks,” the statement stated. “Pakistan’s foreign exchange reserves have about quadrupled since June 2023, but they remain below what is necessary to cover the country’s external financing obligations. The government continues to rely on timely financing from official partners to completely pay its external debt commitments.”