Pakistan’s SBP Foreign Reserves Jump $852M Weekly, Hits $7.75B

(CTN News) – The State Bank of Pakistan (SBP) reported a noteworthy upswing in its foreign exchange reserves, witnessing a substantial weekly increase of $852 million, reaching $7.75 billion as of December 22, according to data released on Thursday.

The total liquid foreign reserves for the country were recorded at $12.85 billion, with commercial banks holding net foreign reserves amounting to $5.1 billion.

The surge in reserves was attributed by the SBP to official government inflows. In its statement, the SBP highlighted, “During the week ending on December 22, 2023, SBP’s reserves increased by $852 million to $7,757.1 million mainly due to the receipt of official Government of Pakistan (GoP) inflows.”

The previous week had seen a decrease in Pakistan’s central bank reserves by $136 million, dropping below the $7 billion mark for the first time in over five months.

The central bank’s reserves received a substantial boost in July, fueled by the first tranche of approximately $1.2 billion from the International Monetary Fund (IMF), following the approval of a new $3-billion Stand-By Arrangement (SBA).

Additional inflows were also reported from Saudi Arabia and the United Arab Emirates (UAE).

Challenges Persist for SBP Foreign Exchange Reserves Despite Recent Uptick

Despite the recent uptick, the foreign exchange reserves held by the State Bank of Pakistan (SBP) continue to face challenges, including the pressure from debt repayments, a surge in import payments following the easing of restrictions, and a notable absence of fresh inflows.

In a significant development, the International Monetary Fund (IMF) announced last month that its staff had successfully reached an agreement with Pakistani authorities on the first review of the Stand-By Arrangement (SBA).

This staff-level agreement is now pending approval by the IMF Executive Board, with a scheduled meeting set for January 11.

In a press release, the IMF stated, “The IMF team has reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of their stabilization program supported by the IMF’s US$3 billion (SDR2,250 million) SBA.”

It further clarified, “The agreement is subject to approval of the IMF’s Executive Board.

Anticipated IMF Approval: Unlocking a Financial Boost of US$700 Million for Pakistan

Upon approval, around US$700 million (SDR 528 million) will become available, bringing total disbursements under the program to almost US$1.9 billion.”

This anticipated inflow from the IMF holds the potential to alleviate some of the challenges faced by the SBP reserves, providing a financial boost.

The approval by the IMF Executive Board on January 11 would pave the way for the release of the mentioned funds, contributing to the ongoing efforts to stabilize and strengthen Pakistan’s economic position.