SBP Foreign Exchange Reserves Drop by $2.66 Billion Due to Debt Repayments

Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased by a record $2.66 billion on a weekly basis, reaching $9.06 billion as of June 20, according to data released on Thursday. This marks the largest weekly decline in SBP reserves in over 3 years, with the central bank's reserves having previously dropped by $2.9 billion in March 2022.

This week's decline has brought the SBP reserves to an 11-month low. The total liquid foreign reserves held by Pakistan currently amount to $14.39 billion, with net foreign reserves held by commercial banks standing at $5.33 billion.

The significant fall in SBP reserves is attributed to the Government of Pakistan's (GOP) external debt repayments, particularly the repayment of commercial borrowing. However, during the current week, the SBP has received GOP commercial loans totaling $3.1 billion and multilateral loans exceeding $500 million, as per the central bank statement.

According to the SBP, these inflows will be reflected in the FX reserves for the week ending on June 27, 2025. SBP Governor Jameel Ahmad, speaking at an event at the Pakistan Stock Exchange (PSX) in April, had revised the projection for foreign exchange reserves held by SBP to $14 billion by the end of June 2025. Earlier estimates by the central bank had pegged the FX reserves at $13 billion by the same period.

However, Sana Tawfik, Head of Research at Arif Habib Limited (AHL), expressed skepticism, stating that it would be challenging for the central bank to achieve the $14 billion reserves target by the end of June. Last week, SBP reserves had increased by $46 million on a weekly basis, reaching $11.72 billion as of June 13.