KARACHI: The foreign exchange reserves held by the central bank fell by $136 million to $6.904 billion in the week ending Dec. 15, the State Bank of Pakistan (SBP) said on Thursday, as it paid off some of its external debt.
The country's total reserves, which include those of commercial banks, also decreased by $138 million to $12.068 billion, the SBP said in a statement. The SBP attributed a decline in the forex reserves to the payment of external debt. The SBP's reserves are enough to cover 1.36 months of imports.
Analysts, however, said the country's external outlook, however, has improved significantly due to the International Monetary Fund's (IMF) $3 billion loan programme, which was approved in July.
Under the IMF's stand-by arrangement (SBA), Pakistan received an immediate disbursement of $1.2 billion from the IMF, along with financial support in the form of deposits and rollovers from friendly countries, such as Saudi Arabia, China and the United Arab Emirates.
The SBA has also enabled Pakistan to secure funding from multilateral institutions like the World Bank and the Asian Development Bank. Moreover, the SBP has been building its foreign exchange buffers and reducing its forward short positions, which stood as high as $5.7 billion in February and have come down to under $3 billion as of October, a drop of 47 percent.
"Finally, Pakistan also continues to make timely payments on Eurobonds as they fall due. According to the SBP, so far Pakistan has repaid $5.4 billion in debt during FY2024 which includes $1.4 billion in interest payments and $4 billion in principal repayments respectively," brokerage Taurus Securities said in a report.
"For the current fiscal year, we estimate the shortfall in Pakistan's gross external financing requirements and the available funding to amount to $5 billion compared to official reserves of $7 billion. This means that Pakistan is well positioned to meet its external obligations during FY2024 - vital for supporting the rupee and investor sentiment."
Pakistan posted a current account surplus of $9 million in November, the State Bank of Pakistan said on Wednesday, as the current account deficit narrowed by 64 percent to $1.16 billion in the first five months of the fiscal year.
The reduction in the current account deficit was helped by tighter fiscal and monetary policies, as well as administrative measures taken by the government that resulted in a declining trade gap.