Pakistan’s Central Bank Eyes Strong Reserve Build-Up
KARACHI: Pakistan’s Central Bank has projected that foreign exchange (FX) reserves will climb past $17 billion by the end of FY26 Business RecorderThe Express Tribune. This is a key signal of growing international confidence, despite ongoing external debt repayments and macroeconomic pressures .
At the close of FY25 on June 30, State Bank had built FX reserves to $14.51 billion . This marked a $5.12 billion increase over the previous year, exceeding the IMF’s $13.9 billion benchmark.
Growing Reserves in FY25 and Real-Time Updates
Weekly data reveals that total liquid reserves surged to $17.005 billion by June 13, 2025, driven by strong inflows to both the SBP and commercial banks.
- SBP-held reserves: climbed to around $11.7 billion
- Commercial banks’ net reserves: reached $5.3 billion.
These figures show that the external buffer has strengthened across the financial system.
Drivers Behind the Reserve Recovery
Several factors have fueled reserve accumulation in FY25:
- Strong remittance inflows, topping $38.3 billion in FY25, further supported the balance
The SBP purchased ~$6 billion in dollars from the market to reinforce the currency - buffer Boosted by $3.1 billion in commercial loans and $500 million+ in multilateral inflows
- First current account surplus in 14 years (~$2.1 billion) helped improve external health
Weekly Volatility Shows Debt Pressures
Despite growth, SBP reserves saw a sharp drop of $2.66 billion in one week ending June 20, 2025—largely due to scheduled external debt repayments, especially to Chinese and commercial creditors. This dip pushed SBP reserves to approximately $9.06 billion, while overall FX reserves remained close to $14.4 billion.
Outlook for FY26: Reserves to Top $17B
During a recent policy announcement, SBP Governor Jameel Ahmad confirmed that, even with external debt rollovers totaling $25.9 billion in FY26, FX reserves are expected to exceed the $17 billion mark by year-end . If Pakistan issues new Eurobonds in global markets, reserves could surpass that target.
Why It Matters: Indicators of Economic Stability
- Reserves growth is a sign of improving economic resilience and external stability
- Strong FX buffers support the rupee and absorb external shocks
- Improved reserves reinforce Pakistan’s image among international creditors
- Supply of over $17B FX reserves may serve as confidence boost for rating agencies and investment funds
FX inflows—particularly remittances and commercial debt rollovers—remain critical for sustaining positive momentum.
What Lies Ahead?
Analysts remain cautious. Reserve growth must persist without heavy reliance on new borrowings. Key drivers going forward:
- Continued remittance growth
- Strong current account management
- Discipline on debt servicing and fiscal reform
- Progress with ongoing IMF Extended Fund Program, which anchors market confidence
Currency analysts have even suggested reserves could near $20 billion in FY26, if inflows stay strong and reforms continue.
Pakistan’s Central Bank Takes the Lead
This projection by Pakistan’s Central Bank shows a shift toward improved macroeconomic credibility. It suggests better policymaking, external financing discipline, and stronger fiscal buffers. If trends hold, Pakistan may reach new milestones in reserve adequacy in FY26.
Conclusion: Building External Buffers for the Road Ahead
Pakistan’s Central Bank has successfully built momentum in strengthening FX reserves. With the FY25 close on a strong note and a strategic forecast for FY26, the country is poised to rebuild its external stability. Surpassing $17 billion in reserves would be an important checkpoint for retaining IMF support, managing the rupee, and enhancing global confidence in Pakistan’s economy. The pressure is on to sustain inflows and tame external spending needs in the year ahead. Click here for latest news
