Pakistan’s foreign exchange reserves held by the central bank dropped sharply by over $2.6 billion in a single week, largely due to significant external debt repayments, according to the State Bank of Pakistan (SBP).
In its weekly report, the SBP said that reserves fell to $9.065 billion as of June 20, down from $11.72 billion on June 13. The decline of $2.657 billion was mainly attributed to repayments of government debt, particularly commercial borrowings.
However, the central bank said it expects a strong recovery in the coming update, with over $3 billion in fresh inflows having already arrived in its accounts. These include $3.1 billion in commercial loans and more than $500 million in multilateral funding.
“These inflows will be reflected in the foreign exchange reserves for the week ending June 27,” the SBP stated.
Meanwhile, foreign exchange reserves held by commercial banks rose slightly by $50 million to $5.333 billion, up from $5.283 billion the previous week.
With the SBP’s reserves falling, the country’s total liquid foreign exchange reserves dropped to $14.4 billion as of June 20, compared with $17 billion a week earlier.
SBP Governor Jameel Ahmed expressed confidence that the central bank’s reserves would reach $14 billion by the end of the current fiscal year.
Analysts noted that despite the slow pace of inflows, Pakistan has managed to meet its external debt obligations during the ongoing fiscal year.
