Pakistan’s Forex Reserves
Pakistan’s foreign exchange reserves have suffered a sharp decline of $2.66 billion within a single week, according to the latest figures released by the State Bank of Pakistan (SBP). The drop has raised fresh concerns about the country’s external debt obligations and its fragile balance of payments position.
As per the SBP’s weekly report, the central bank’s reserves fell from $11.72 billion to $9.65 billion. The decline primarily stems from scheduled repayments to foreign creditors, including major outflows to Chinese and other international commercial banks.
These repayments were part of ongoing debt servicing arrangements that Pakistan is obligated to fulfill, reflecting the continued financial strain the country faces in managing its external liabilities.
Despite the significant contraction in SBP-held reserves, the foreign exchange deposits maintained by commercial banks recorded a slight improvement.
Their reserves rose by $50 million during the same period, bringing the commercial bank-held reserves to $5.33 billion. This development brought the country’s total foreign exchange reserves to $14.40 billion as of the latest reporting period.
Sources within the banking sector noted that the repayments were previously scheduled and part of Pakistan’s regular debt management cycle.
However, they also acknowledged that such large-scale outflows, without immediate matching inflows, place pressure on the rupee and could impact investor confidence if the trend continues.
In a somewhat positive turn, government officials reported that certain commercial loans had been successfully rescheduled, which allowed Pakistan to regain access to funds that had already been disbursed earlier.
Moreover, during the same period, the country secured fresh inflows amounting to $500 million from the World Bank and the Asian Development Bank (ADB). These funds are aimed at supporting economic reforms and stabilizing the macroeconomic framework.
In addition to these development loans, the government also managed to arrange new commercial financing worth $3.1 billion. These inflows are expected to be recorded in the upcoming forex data for the week ending June 27.
If realized as planned, the fresh financing may offer temporary relief to Pakistan’s reserve position and help ease short-term external financing pressures.
However, economic analysts caution that without sustained inflows, increased exports, and a reduction in imports, the country’s forex situation could remain vulnerable in the months ahead.
Pakistan continues to rely heavily on external borrowing and donor support to maintain reserve adequacy, highlighting the need for long-term structural reforms in its fiscal and trade sectors.
