Karachi, May 9, 2024 – Pakistan has seen a robust increase in foreign exchange reserves this week, with an infusion of $1.143 billion, boosting the total reserves to $14.459 billion as of May 3, 2024, according to data released by the State Bank of Pakistan (SBP).
This significant upswing, from $13.316 billion reported on April 26, comes primarily from the disbursement of $1.1 billion by the International Monetary Fund (IMF) as part of the final tranche under its Stand-By Arrangement (SBA) program. This timely financial assistance has played a crucial role in stabilizing the country’s reserve position amid ongoing economic challenges.
The reserves held by the SBP itself jumped by $1.114 billion over the week, standing at $9.12 billion by the end of the period. This marks a substantial recovery from the previous figure of $8.006 billion. Meanwhile, the reserves managed by commercial banks also saw a modest increase, growing by $29 million to reach $5.339 billion.
“The receipt of the final tranche from the IMF under the SBA program significantly bolstered the reserve position of the central bank,” an SBP spokesperson noted in Thursday’s release. “This enhances our ability to manage the country’s external sector more effectively and ensures stability in the financial markets.”
The positive news from the financial sector comes at a time when Pakistan is grappling with various economic pressures, including high inflation rates and concerns over balance of payments. Analysts believe that the reinforcement of the foreign exchange reserves is a vital step towards achieving macroeconomic stability and will help the government in its ongoing negotiations with other international financial institutions.
“This significant increase in reserves builds a buffer that could help Pakistan meet its external debt obligations and finance imports, which is crucial for maintaining economic stability,” said Amina Khalid, an economist based in Lahore. “Moreover, it sends a positive signal to markets and rating agencies about Pakistan’s financial health.”
The IMF support has been instrumental in Pakistan’s recent economic strategy, designed to navigate through fiscal deficits and a sluggish growth rate. The completion of the IMF’s SBA program marks an important milestone in the country’s efforts to restore fiscal discipline and promote a sustainable economic environment.
With the current boost in foreign exchange reserves, the government might find some breathing space to implement necessary reforms aimed at stimulating economic growth and improving public welfare. However, experts caution that this is just a part of the broader economic challenges facing the nation, suggesting that sustained efforts and prudent policies are still required to secure long-term financial stability and growth.
