KARACHI – In a significant development, Pakistan’s liquid foreign exchange reserves witnessed a robust increase of $401 million, reaching $20.836 billion by the week ending March 26, 2021, according to the State Bank of Pakistan (SBP).
This surge marks a positive trajectory in the country’s financial health, driven by strategic inflows and effective economic management.
As of the week ending March 19, 2021, the foreign exchange reserves stood at $20.435 billion, indicating a noteworthy rise within a week. The official reserves of the SBP, a key indicator of the central bank’s financial position, also registered an impressive increase of $378 million, reaching $13.673 billion by the week ending March 26, 2021, compared to $13.295 billion a week earlier.
The substantial rise in the SBP’s official reserves can be attributed to a significant inflow of $498.7 million from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) program. After accounting for external debt repayments, the central bank’s reserves increased by $378 million during the week.
The IMF’s support, particularly under the EFF program, plays a vital role in bolstering Pakistan’s external account and reserves. These inflows contribute to enhancing the country’s capacity to meet its international obligations, stabilize the currency, and navigate economic challenges.
The foreign exchange reserves held by commercial banks also experienced a modest increase, rising by $23 million to reach $7.163 billion by the week ending March 26, 2021, compared to $7.14 billion a week earlier. Commercial banks’ reserves are integral to overall financial stability and support the smooth functioning of the banking sector.
The strategic inflow from the IMF comes at a crucial time, providing a financial cushion amid global economic uncertainties and challenges posed by the ongoing COVID-19 pandemic. The funds received will contribute to the country’s efforts in managing its balance of payments and strengthening its fiscal position.
Pakistan’s economic resilience and the positive trend in foreign exchange reserves reflect effective policy measures, structural reforms, and international support. The commitment to prudent economic management is evident in the consistent efforts to secure external funding and maintain a favorable balance of payments.
The surge in reserves is expected to bolster investor confidence, as it demonstrates the country’s ability to navigate economic headwinds and secure support from international financial institutions. It also positions Pakistan favorably in terms of meeting future financial commitments and ensuring macroeconomic stability.
While the country celebrates the positive momentum in its foreign exchange reserves, continued vigilance and prudent fiscal policies will be essential to sustain this trajectory. The challenges posed by the global economic landscape necessitate ongoing efforts to enhance economic competitiveness, attract investments, and promote sustainable growth.
The increase in Pakistan’s liquid foreign exchange reserves to $20.836 billion by the week ending March 26, 2021, fueled by the IMF inflow, is a testament to the country’s resilience and effective economic management. This positive trend positions Pakistan favorably in the global economic landscape, paving the way for continued stability and growth in the face of ongoing challenges.
