By Staff Reporter
KARACHI: Foreign exchange reserves held by the State Bank of Pakistan (SBP) fell by $540 million or 4.84 percent in a single week, reaching a six-month low of $10.61 billion as of March 21, data released on Thursday showed, driven primarily by external debt repayments.
However, a potential lifeline looms as the International Monetary Fund (IMF) nears approval of $2 billion in disbursements to bolster the country’s dwindling reserves.
Total liquid foreign reserves held by Pakistan stood at $15.55 billion, with commercial banks accounting for $4.94 billion of that figure, according to the SBP’s latest update.
The central bank’s reserves, a critical indicator of the country’s ability to manage external payments and stabilise its currency, have now hit their lowest level since September 2024.
The SBP attributed the sharp decline to scheduled debt obligations. “During the week ended on 21-Mar-2025, SBP reserves decreased by US$540 million to US$10,606.8 million due to external debt repayments,” the central bank said in a statement. This follows a modest uptick last week, when reserves rose by $49 million.
The drop highlights the persistent pressure on Pakistan’s economy, which has been grappling with mounting external liabilities. Relief, however, may be on the horizon.
Earlier this week, the IMF announced that its staff had reached an agreement with Pakistani authorities on two significant fronts. First, a new $1.3 billion loan arrangement, spanning 28 months and focused on climate resilience, aims to support Pakistan’s efforts to address environmental and economic challenges.
Second, the IMF completed the first review of the ongoing 37-month, $7 billion bailout programme, paving the way for an additional $1 billion disbursement. Pending approval from the IMF’s Executive Board, these funds would bring total disbursements under the bailout to $2 billion.
The anticipated $2 billion inflow is expected to provide a much-needed boost to Pakistan’s reserves, enhancing its capacity to meet financial obligations.
Economists view the IMF support as a critical step for Pakistan, which has relied on international assistance to navigate recurring balance-of-payments crises. The IMF-backed reforms tied to these funds are intended to address structural weaknesses, improve fiscal discipline, and restore investor confidence.
However, the timing of the disbursements remains key, as prolonged delays could exacerbate the strain on reserves.
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