Karachi, October 3, 2024 — Pakistan’s foreign exchange reserves have surged to nearly $16 billion, marking a significant increase after receiving inflows from the International Monetary Fund (IMF), the State Bank of Pakistan (SBP) announced on Thursday.
According to the SBP, the nation’s forex reserves climbed by $1.11 billion, reaching $15.98 billion as of September 27, 2024, up from $14.873 billion the previous week. This upward trajectory comes as a relief to the country, which has been grappling with a precarious balance of payments and inflationary pressures.
The SBP’s own forex reserves experienced a substantial boost, jumping by $1.168 billion to stand at $10.702 billion by the week ending September 27, 2024, compared to $9.534 billion just a week earlier. This sharp increase is primarily attributed to the receipt of $1.027 billion from the IMF as part of the Extended Fund Facility (EFF) program, which is designed to support Pakistan’s ongoing economic reform efforts.
The recent IMF disbursement is part of a broader $7 billion package, which was approved by the IMF’s executive board on September 25, 2024. The EFF program aims to stabilize Pakistan’s economy, enhance fiscal discipline, and promote sustainable growth. This substantial financial support is expected to strengthen Pakistan’s foreign exchange reserves, alleviate its external financing needs, and foster economic resilience amidst a turbulent global economic environment.
However, while the SBP’s forex reserves have seen a remarkable rise, the foreign exchange reserves of commercial banks witnessed a slight decline. The reserves held by commercial banks fell by $58 million, bringing the total to $5.281 billion as of September 27, 2024, down from $5.339 billion a week earlier. This decrease, though modest, highlights the ongoing challenges faced by the banking sector in managing liquidity amidst volatile external market conditions.
The rise in overall Pakistan’s forex reserves comes at a crucial time for Pakistan, which has been navigating economic uncertainty driven by rising inflation, currency depreciation, and political instability. The increase in reserves is expected to provide a buffer against external shocks, stabilize the Pakistani rupee, and restore investor confidence in the country’s economic prospects.
Pakistan’s focus now shifts to effective utilization of these reserves to ensure sustainable economic growth while meeting the stringent conditions set by the IMF under the EFF program, including fiscal reforms, curbing inflation, and enhancing revenue collection mechanisms.