Karachi, January 2, 2025 – Pakistan’s net foreign exchange (forex) reserves increased by $37 million during the week ending December 27, 2024, despite a significant decline in the official reserves held by the State Bank of Pakistan (SBP). This disparity underscores evolving trends in the country’s financial framework.
According to the latest figures released by the SBP on Thursday, the country’s net forex reserves climbed to $16.409 billion, up from $16.372 billion reported a week earlier on December 20, 2024. This modest rise reflects a blend of private sector resilience and broader economic realignments.
Conversely, the SBP’s official reserves recorded a substantial drop of $143 million, settling at $11.711 billion as of December 27, 2024, compared to $11.854 billion a week prior. The central bank attributed this decline to external debt repayments made by the government. This reduction highlights Pakistan’s ongoing struggles with its debt servicing obligations and reliance on external financial inflows.
On the other hand, the forex reserves held by commercial banks saw a robust increase of $180 million, reaching $4.698 billion by the week’s end. This growth in private reserves indicates a rise in foreign currency deposits, potentially driven by stronger remittance inflows and an uptick in investor confidence. It reflects positively on the private banking sector’s capacity to attract and manage foreign exchange resources.
The overall increase in net forex reserves provides a glimmer of optimism for Pakistan’s economic outlook. However, the sharp reduction in SBP’s reserves serves as a reminder of the pressing need to devise sustainable solutions for external financing. Financial experts stress the importance of enhancing fiscal discipline, implementing structural reforms, and fostering a more conducive environment for foreign investment to reduce dependency on borrowing.
Pakistan’s economic policymakers face the dual challenge of meeting external financial obligations while promoting domestic growth. The recent rise in net reserves, despite the central bank’s decline, underscores an opportunity to strengthen economic stability amid persistent challenges in the global and domestic economic landscape.