Islamabad, Feb 26: The State Bank of Pakistan (SBP) has significantly bolstered its foreign exchange reserves by purchasing $4.98 billion from the interbank market between June and November 2024. This move aims to strengthen the country’s financial position and manage external debt obligations. In November alone, the central bank acquired $1.151 billion, surpassing the $1.026 billion purchased in October.
According to a report by Arif Habib Limited, the SBP’s intervention in the forex market contributed to a $2.9 billion rise in reserves, while the remaining funds were allocated for debt servicing.
As of February 14, Pakistan’s forex reserves stood at $11.20 billion, providing coverage for over two months of imports. Although this marks a slight recovery following three consecutive weeks of decline, the country still faces significant economic challenges. Rising external debt repayments and an expanding trade deficit continue to exert pressure on reserves, particularly in the absence of substantial foreign inflows.
However, Pakistan anticipates financial relief from international sources. Disbursements under the International Monetary Fund’s (IMF) Extended Fund Facility, along with funding for climate resilience initiatives, could help stabilize the reserves.
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Finance Minister Muhammad Aurangzeb confirmed the arrival of an IMF technical team in Pakistan to discuss the Climate Resiliency Fund. This delegation is set to remain in the country for three to four days, engaging in preliminary discussions before further negotiations. Additionally, another IMF delegation is scheduled to visit in the first week of March for a comprehensive review of Pakistan’s $7 billion loan program.
While the SBP’s efforts have provided temporary relief, sustained economic stability will require strategic financial planning, enhanced export growth, and increased foreign investment. The upcoming IMF meetings and potential disbursements will play a crucial role in shaping Pakistan’s economic outlook in the coming months.
