Pakistan’s economic landscape received a welcomed boost this week with a modest yet significant increase of $21 million in foreign exchange reserves held by the State Bank of Pakistan (SBP), bringing the total reserves to $7.04 billion. This positive development injected a sense of optimism into a nation grappling with financial challenges.
The country’s total liquid foreign reserves now stand at $12.2 billion, with net foreign reserves held by commercial banks reaching $5.16 billion, marking a 1.55% week-on-week increase of $78.7 million to $5.17 billion. This upward trend represents a reversal from the previous week’s decline of $237 million, offering a glimmer of hope for Pakistan’s financial stability.
While the central bank did not disclose specific reasons for the increase, analysts point to several potential factors. One contributing element could be the influx of fresh dollar inflows, with Pakistan actively pursuing avenues to boost reserves, including receiving a $1.2 billion tranche from the International Monetary Fund’s (IMF) Stand-By Arrangement earlier in the year. Financial assistance from regional allies such as Saudi Arabia and the UAE may have also played a role.
Despite these positive developments, the road to complete economic recovery remains challenging. Pakistan’s external debt burden remains a significant concern, and challenges persist with the current account deficit. The recent easing of import restrictions, while beneficial for domestic consumption, has led to an increase in import payments, putting pressure on the reserves.
