Karachi, December 28, 2023 – The State Bank of Pakistan (SBP) reported a significant uptick in its official foreign exchange reserves, recording a noteworthy increase of $852 million for the week ending December 22, 2023.
The surge propelled the central bank’s reserves from $6.905 billion to $7.757 billion, marking a positive turn in Pakistan’s economic landscape.
This surge in foreign exchange reserves was primarily attributed to substantial foreign inflows received by the government of Pakistan, according to a statement released by the State Bank on Thursday. Economists are optimistic about the implications of this increase, asserting that it will play a crucial role in managing the country’s balance of payments and enhancing its external debt repayment capacity.
The total foreign exchange reserves for Pakistan, including those held by the central bank and commercial banks, witnessed a combined boost of $788 million. The overall reserves reached $12.856 billion by the week ending December 22, 2023, compared to the previous week’s level of $12.068 billion. This surge is seen as a positive development that could help alleviate concerns about the country’s economic stability.
It is important to contextualize this recent development within the broader economic history of Pakistan. The current reserves, while a significant improvement, are notably distant from the robust levels observed in August 2021. Since that peak period, there has been a persistent decline in reserves, prompting close scrutiny from economic analysts to identify contributing factors.
Nevertheless, the recent increase in foreign exchange reserves is viewed as a positive sign that could potentially alter the external sector scenario, according to leading economists. The influx of funds is expected to strengthen the country’s ability to meet its external obligations and enhance its financial resilience.
Despite the overall positive trend, the foreign exchange reserves held by commercial banks experienced a slight decline during the same period. The reserves decreased by $64 million, falling from $5.163 billion to $5.099 billion. While this dip in commercial bank reserves may raise questions, economists assert that the broader surge in the central bank’s reserves will likely offset any concerns, contributing to the overall stability of Pakistan’s foreign exchange position.
As Pakistan strives to navigate economic challenges and attract foreign investment, the recent boost in foreign exchange reserves serves as a welcome development. The government’s efforts to secure foreign inflows are evidently bearing fruit, offering a ray of hope for sustained economic recovery and stability in the coming months. Analysts will closely monitor future developments to assess the impact of these reserves on the broader economic landscape and gauge the effectiveness of policy measures undertaken to bolster the country’s financial position.
