SBP reports notable surge in forex reserves, reaching $7.75 billion

WEB DESK: In a notable surge, the State Bank of Pakistan (SBP) witnessed a substantial increase of $852 million in its foreign exchange reserves within a week, reaching a total of $7.75 billion as of December 22, according to data released on Thursday.

The country’s overall liquid foreign reserves reached $12.85 billion, with commercial banks holding net foreign reserves of $5.1 billion. The SBP attributed this rise in reserves to official government inflows.

During the week ending on December 22, 2023, the SBP’s reserves grew by $852 million to $7,757.1 million, primarily due to the receipt of official Government of Pakistan (GoP) inflows, as stated by the central bank.

Notably, in the previous week, Pakistan’s central bank reserves had experienced a decrease of $136 million, falling below $7 billion for the first time in over five months.

The boost in SBP reserves occurred in July, when Pakistan received the initial 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 received from Saudi Arabia and the UAE.

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However, these reserves have faced pressure due to debt repayments, increased import payments following eased restrictions, and a lack of fresh inflows.

In a significant development, the IMF announced last month that its staff had reached an agreement with Pakistani authorities on the first review of the SBA.

This staff-level agreement, subject to approval by the IMF Executive Board scheduled to meet on January 11, could unlock around US$700 million, bringing total disbursements under the programme to nearly US$1.9 billion. The anticipated inflow from the IMF is expected to contribute to the growth of SBP reserves.