SBP reserves increase $464mn to reach over 5-month high of $8.2bn

Foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $464 million on a weekly basis, clocking in at $8.2 billion as of December 29, data released on Thursday showed.

Total liquid foreign reserves held by the country stood at $13.2 billion. Net foreign reserves held by commercial banks stood at $5 billion.

The SBP attributed the surge in reserves to official government inflows.

“During the week ended on 29-Dec-2023, SBP’s reserves increased by US$ 464 million to US$ 8,221.2 million mainly due to official GoP inflows,” it said.

Last week, Pakistan’s central bank reserves witnessed a significant increase of $852 million.

The SBP reserves are now at the highest level since July 14, 2023, when the central bank reserves increased by $4.2 billion to reach $8.73 billion. The increase was on the back of Pakistan receiving the first tranche of around $1.2 billion from the International Monetary Fund (IMF) after the lender approved a new $3-billion Stand-By Arrangement (SBA). The country also got inflows from Saudi Arabia and the UAE.

However, the reserves remained under pressure since then due to debt repayments, rise in import payments after easing restrictions, and a lack of fresh inflows.

In a major breakthrough, the IMF announced on November 15 that its staff and Pakistani authorities had reached an agreement on the first review of the SBA.

The staff-level agreement is subject to approval by the IMF Executive Board, which is scheduled to meet on January 11.

“The IMF team has reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of their stabilisation program supported by the IMF’s US$3 billion (SDR2,250 million) SBA,” the IMF said in its press release then.

“The agreement is subject to approval of the IMF’s Executive Board. Upon approval around US$700 million (SDR 528 million) will become available bringing total disbursements under the program to almost US$1.9 billion,” it added.

The expected inflow from the IMF will also help increase the SBP reserves.