Pakistan’s foreign exchange reserves have climbed to $21.1bn, the highest level since March 2022.
The State Bank now holds $15.9bn, giving the country more than 2.6 months of import cover, compared to less than two weeks in February 2023.
What makes this recovery different is that it is not driven by fresh borrowing. External debt has not surged, the debt-to-GDP ratio has fallen from 31 per cent to 26 per cent, and SBP reserves have risen from $2.9bn to nearly $16bn. At the same time, forward foreign exchange liabilities have been cut by around 65 per cent.
In earlier years, particularly between 2015 and 2022, debt kept rising while reserves kept falling. Since 2022, the trend has reversed, with debt pressure easing and reserves rebuilding sharply.
The rise in Pakistan’s foreign exchange reserves reflects the country’s shift away from a debt-driven crisis towards sustainable stability. This development provides a stronger foundation for economic stability, a more favourable investment climate, and better preparedness to meet future fiscal challenges.
Last week, the International Monetary Fund (IMF) Executive Board approved the disbursement of $1.2 billion for Pakistan, $1 billion under the Extended Fund Facility (EFF), and $200 million through the Resilience and Sustainability Facility (RSF).
“Inflation has increased, reflecting the impact of the floods on food prices, but this is expected to be temporary. Gross reserves stood at $14.5 billion at the end of FY25, up from $9.4 billion a year earlier, and are projected to continue to be rebuilt in FY26 and over the medium term,” the IMF said in its statement.
