The State Bank of Pakistan (SBP) reported on Thursday that the country’s foreign exchange reserves increased by $35 million during the week ending February 14, reaching $11.20 billion. However, Pakistan continues to face pressure due to its external financing needs.
The central bank stated that the country’s total liquid foreign reserves stood at $15.95 billion during the period under review. However, it did not specify the source of these inflows. Meanwhile, commercial banks’ dollar reserves amounted to $4.75 billion.
Earlier, during the week ending February 7, SBP’s forex reserves had decreased by $252 million, bringing the total down to $11.17 billion. The decline was attributed to external debt repayments.
During the same period, the country’s total liquid foreign reserves dropped by $181 million to $15.863 billion. However, commercial banks’ reserves increased by $70 million to $4.696 billion.
Pakistan’s external account has improved due to a rise in remittances and better export performance. However, external debt repayments continue to exert pressure on forex reserves.
Earlier this month, Fitch Ratings noted that Pakistan’s external financing needs will remain significant in the coming year, despite progress in rebuilding its foreign exchange reserves.
According to Fitch, Pakistan needs to repay over $22 billion in external debt in the fiscal year 2025, including nearly $13 billion in bilateral deposits. The credit rating agency warned that “securing sufficient external financing remains a challenge, given large maturities and existing lender exposures.”
Pakistan is currently undergoing economic reforms under a $7 billion IMF program, which is set for its first review later this month. The program aims to help Pakistan address deep-rooted economic challenges, such as large fiscal and current account deficits.
Fitch further cautioned that any deterioration in external liquidity, for instance, due to delays in IMF reviews, could lead to negative action. However, the agency acknowledged that Pakistan has made notable progress in rebuilding its forex reserves, exceeding the targets set by the IMF.
