The last time the reserves had reached the $9 billion mark was on July 15, 2022. 
A currency exchange dealer counting $100 bills. — AFP/File
KARACHI: The foreign exchange reserves held by the central bank soared to a nearly two-year high of $9.12 billion as of May 3, boosted by the final tranche of funding from the International Monetary Fund (IMF).
“During the week ended on 03-May-2024, SBP reserves increased by $1,114 million to $9,120.3 million mainly due to receipt of $1.1 billion from IMF as final tranche under SBA program,” the State Bank of Pakistan said in a statement.
The last time the reserves had reached the $9 billion mark was on July 15, 2022.On April 29, the SBP received $1.1 billion as the second and final installment of a $3 billion short-term stand-by arrangement (SBA) from the IMF. Pakistan successfully completed its loan programme last month, which prevented the country from defaulting on its sovereign debt obligations.
The country’s total forex reserves increased by $1.143 billion to $14.459 billion. The reserves of commercial banks also rose by $29 million to $5.339 billion.Analysts found it encouraging that, while paying off external debt, the central bank has been able to improve foreign exchange reserves.
“The foreign reserves held by the SBP have been increasing as Pakistan has received the final tranche from the IMF. Secondly, the regular inflows are exceeding the amount required for debt servicing and imports,” said Samiullah Tariq, the head of research at Pak-Kuwait Investment Company.
The SBP has paid off its commercial loans, and now its debt profile consists of bilateral and multilateral loans, which has resulted in an improvement in the maturity profile of the debt.Despite weak financial inflows, the reduction in the current account deficit has enabled the central bank to make significant debt repayments, including the repayment of a $1 billion Eurobond.
The SBP is optimistic that it can maintain the $9 billion reserve level by June 2024, despite upcoming external payments of $1.8 billion. During the fiscal year 2024, the external debt that needed to be serviced was $24.3 billion.
Out of this amount, $3.9 billion was allocated for interest payments, while the remaining $20.4 billion was for principal repayments. The majority of this debt has already been settled, and only $1.8 billion in principal remains to be paid in the remaining months of FY24, according to the SBP.
This month, an IMF mission is expected to visit Pakistan to discuss a new programme, ahead of Islamabad starting the regular budget-making process for the upcoming fiscal year.
