Karachi, October 10, 2024 – Pakistan’s total foreign exchange reserves have risen to $16.05 billion, according to the latest data released by the State Bank of Pakistan (SBP) on Thursday.
The steady increase in reserves reflects a positive shift in the country’s financial standing, bolstered by a recent inflow from the International Monetary Fund (IMF).
The SBP report revealed that Pakistan’s foreign exchange reserves grew by $64 million during the week ended October 4, 2024, bringing the total to $16.047 billion, up from $15.983 billion the previous week. This increase marks a continuation of the upward trajectory that the country has experienced over recent months, helping to alleviate concerns about external financing and currency stability.
Breaking down the figures, the foreign exchange reserves held by the central bank itself saw a significant rise of $106 million. The SBP’s reserves reached $10.808 billion as of October 4, compared to $10.702 billion a week earlier. This increase can be partially attributed to the recent $1 billion tranche disbursed by the IMF under its Extended Fund Facility (EFF). The tranche is part of the $7 billion loan program agreed upon between Pakistan and the IMF, aimed at stabilizing the country’s economy, addressing its balance of payments issues, and ensuring long-term fiscal discipline.
The IMF’s financial support comes at a critical time for Pakistan, which has been grappling with economic challenges, including high inflation, a depreciating currency, and widening fiscal deficits. The influx of IMF funds has provided a much-needed cushion for Pakistan’s foreign exchange reserves, enhancing investor confidence and reinforcing the country’s ability to meet its external obligations.
However, not all aspects of the reserves data were positive. While the SBP’s reserves increased, the foreign exchange reserves held by commercial banks witnessed a decline. The reserves in commercial banks fell by $42 million during the same week, dropping to $5.239 billion from $5.281 billion a week prior. This contraction suggests that the private banking sector continues to face liquidity pressures, likely driven by foreign currency outflows and lower remittances.
The overall rise in Pakistan’s total foreign exchange reserves offers a positive signal for the country’s economic resilience, as the government continues to navigate through a challenging global economic landscape. The SBP’s active role in managing the reserves and its strategic cooperation with international financial institutions, like the IMF, has so far been instrumental in stabilizing Pakistan’s external position. However, sustained efforts will be required to address the structural imbalances that have long plagued the economy, particularly in light of ongoing fiscal and monetary challenges.
This uptick in reserves will serve as a temporary relief, but the road to long-term economic stability remains arduous, requiring continued fiscal prudence and consistent policy measures.