Pakistan’s economic landscape received a much-needed boost this week, as foreign exchange reserves held by the State Bank of Pakistan (SBP) witnessed a welcome increase of $21 million.
This modest yet significant rise, bringing the total reserves to $7.04 billion, injected a dose of optimism into a nation grappling with financial challenges.
Total liquid foreign reserves held by the country stood at $12.2 billion. Net foreign reserves held by commercial banks stood at $5.16 billion. The reserves held by commercial banks rose by $78.7m or 1.55% WoW to $5.17bn.
The upward trend marks a reversal from last week’s $237 million decline, offering a glimmer of hope for Pakistan’s financial stability. While the central bank remained mum on the specific reasons for the increase, analysts point towards several potential factors.
One contributing element could be the influx of fresh dollar inflows. Pakistan has been actively pursuing avenues to bolster its reserves, including receiving the first tranche of $1.2 billion from the International Monetary Fund’s (IMF) Stand-By Arrangement earlier this year. Additionally, financial assistance from regional allies like Saudi Arabia and the UAE might have played a role.
However, the road to complete recovery remains long. Pakistan’s external debt burden remains a significant concern, and the current account deficit continues to pose challenges. The recent easing of import restrictions, while beneficial for domestic consumption, has also led to an increase in import payments, putting pressure on the reserves.
