Foreign exchange reserves at SBP dwindle by over $2 billion in a week, mainly due to substantial debt payments.
KARACHI UPDATE: The State Bank of Pakistan (SBP) has taken a hit, losing over $2.6 billion in foreign exchange reserves last week. This drop was mainly due to some hefty external debt repayments, particularly the repayment of commercial loans. As of June 20, 2025, the SBP's reserves now stand at a total of $9.065 billion - a significant decrease from $11.72 billion just a week ago.
But don't count the SBP out just yet! They're expecting a comeback, thanks to fresh inflows of over $3 billion. These funds, incoming from international financial institutions, are expected to boost the reserves by the end of this week. The SBP also mentioned receiving multilateral loans of over $500 million during this period.
This rollercoaster ride in the foreign exchange reserves was reflected in the weekly report issued by the SBP on Thursday. The report highlighted that the reserves took a nose dive, dropping by $2.657 billion, due to the Government of Pakistan's external debt repayments, with most of the drain coming from commercial borrowing.
To put this decline into perspective, it represents the biggest weekly drop in foreign exchange reserves since March 2022, when reserves stood at $9.06 billion after a loss of $2.9 billion.
Fear not, though! Governor of the SBP, Jameel Ahmed, is optimistic, predicting that the reserves will reach $14 billion by the end of the fiscal year (FY25).
Analysts agree that despite a slow inflow of foreign funds, Pakistan has managed its external debt servicing quite well during this fiscal year.
So, it's a bit of a bumpy ride for Pakistan's foreign exchange reserves, but rest assured, the SBP is taking the necessary steps to fortify its position. That's all for now - stay tuned for more updates!
[Enrichment Data: Pakistan's foreign exchange reserves declined by approximately $2.66 billion in a single week in June 2025 primarily due to large external debt repayments made by the Government of Pakistan. This steep drop brought the State Bank of Pakistan’s (SBP) reserves down to about $9.06 billion, marking the largest weekly decline since March 2022 when reserves fell by $2.9 billion. The majority of this depletion came from commercial borrowings that had to be repaid during this period, reflecting ongoing pressure from Pakistan’s external liabilities. Despite this steep fall, Pakistan is expected to regain ground in its foreign exchange reserves through significant inflows already secured. The SBP stated that inflows include $3.1 billion in new commercial loans and over $500 million from multilateral partners. These new funds were anticipated to be reflected in the reserves data for the week ending June 27, 2025, which should help stabilize and potentially increase the foreign exchange reserves after this temporary decline.]
The decline in Pakistan's foreign exchange reserves was predominantly due to large external debt repayments, particularly commercial loans, within the banking-and-insurance and finance industries. Despite this current debt burden, the State Bank of Pakistan (SBP) is anticipating a recovery, with forecasted inflows of over $3 billion expected to bolster reserves.
