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

KARACHI: Pakistan’s foreign exchange reserves held by the central bank increased by $112 million to $9.4 billion in the week ending August 23, the State Bank of Pakistan said on Thursday.

The country’s foreign exchange reserves rose by $109 million to $14.78 billion. However, the reserves of commercial banks fell by $3 million to $5.37 billion.The SBP’s reserves are sufficient to cover less than two months of imports.

The reduction in the current account deficit helped by increased remittances and exports led to growth in forex reserves.In July FY2025, Pakistan saw a reduction in its current account deficit due to an increase in remittances and improvement in the balance of primary income. The deficit fell to $162 million, marking a 78 per cent decrease from the previous year and a 48 per cent decrease from the previous month.

The repatriation of profits and dividends from foreign investments in Pakistan significantly increased to $139 million in the first month of the current fiscal year, compared with $2.2 million in the same period last year.

Pakistan is working to secure final approval from the executive board of the International Monetary Fund for a new $7 billion loan programme. This approval is delaying due to the pending confirmation of debt rollovers and bridging the country’s external financing gap.

Pakistan is also seeking approximately $4 billion in loans from Middle Eastern banks, with Saudi Arabia’s rollover of its previous debt still pending. Negotiations are ongoing for the continuation of the oil financing facility from Saudi Arabia.

Recent reports indicate that Saudi Arabia has made an offer related to the Reko Diq project, and if Pakistani authorities accept this offer, it could facilitate both debt rollovers and additional financing.

On Wednesday, Moody’s Ratings upgraded Pakistan’s ratings to Caa2, citing the country’s improving macroeconomic conditions and moderately better government liquidity and external positions, which were previously at very weak levels.

“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,” Moody’s said in a statement.

“We expect the IMF board to approve the EFF in the next few weeks,” it said. “Pakistan’s foreign exchange reserves have about doubled since June 2023, although they remain below what is required to meet its external financing needs. The country remains reliant on timely financing from official partners to fully meet its external debt obligations,” it added.