SBP reserves drop by $76 million amid debt repayments

ISLAMABAD: The State Bank of Pakistan’s (SBP) foreign exchange reserves dropped by $76.3 million, or 0.67 per cent, to $11.37 billion in the week ending January 24.

Similarly, the country’s total reserves saw a decline of $137.2 million, or 0.85 per cent, bringing the total to $16.05 billion. Commercial banks also experienced a drop, with reserves falling by $60.9 million, or 1.28 per cent, to $4.68 billion.

Despite these recent declines, SBP’s reserves have increased by $1.98 billion, or 21.12 per cent, since the start of the current fiscal year. However, for the calendar year, reserves have decreased by $338.1 million or 2.89 per cent.

The SBP’s reserves are under pressure due to low financial inflows and significant debt repayments. Governor Jameel Ahmad, speaking after a monetary policy meeting, highlighted that large portion of the debt has already been settled including $2.4 billion in foreign repayments during December and January, when many obligations matured.

Ahmad further explained that, of the $26.1 billion in external debt due in FY25, the net amount, after adjusting for rollovers and refinancing, stands at $10 billion, with $6.4 billion already repaid. For the rest of FY25, the remaining net repayable amount is $3.6 billion.

He added expected inflows from commercial banks and bilateral sources in the second half of the fiscal year should counterbalance the outflows, easing any pressure on foreign reserves.

Meanwhile, Minister of State for Finance Ali Pervaiz Malik recently stressed that Pakistan, with its $100 billion financing needs over the short- to medium-term, cannot afford to exit the International Monetary Fund (IMF) programme.

The SBP’s monetary policy statement indicated that while financial inflows were modest in the first half of FY25, they are expected to pick up in the coming months.

With much of the official debt already repaid, the combination of an improved current account outlook and anticipated financial inflows is projected to boost SBP’s reserves to over $13 billion by June 2025.

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