SBP Buys $4.98B to Strengthen Reserves Amid Debt Challenges

Between June and November 2024, the State Bank of Pakistan (SBP) acquired $4.98 billion from the interbank market to bolster its foreign exchange reserves and address debt obligations, according to recent reports.

In November, the SBP purchased $1.151 billion, marking an increase from $1.026 billion in October.

A report by Arif Habib Limited highlighted that the SBP’s foreign exchange interventions were a key factor in boosting reserves by $2.9 billion, with the remaining funds allocated for servicing external debt.

As of February 14, the SBP’s reserves totaled $11.20 billion, sufficient to cover more than two months' worth of imports.

Although reserves showed a slight recovery after a three-week decline, the ongoing external debt repayments and a growing current account deficit—mainly due to an expanding trade gap—pose a risk to these reserves, especially without additional foreign inflows.

However, anticipated disbursements from the International Monetary Fund (IMF) under the Extended Fund Facility, coupled with climate resilience funding, could offer some support to the reserves.

Finance Minister Muhammad Aurangzeb confirmed that an IMF technical mission has arrived in Pakistan to discuss the Climate Resiliency Fund. The mission will stay for three to four days before further discussions. Moreover, another IMF delegation is scheduled to visit in early March for an official review of Pakistan’s $7 billion loan programme.