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The State Bank of Pakistan (SBP) has made a significant move to stabilize its foreign reserves by purchasing $6.8 billion from the interbank market between June 2024 and March 2025. This action is part of broader efforts to meet external debt repayments and boost the country’s foreign exchange reserves.
In March 2025 alone, the SBP acquired $860 million, signaling an aggressive approach to ensuring financial stability and preparing to reach the government’s $14 billion reserves target by the end of FY2025.
Reserves Impacted by Debt Repayments
As of June 20, Pakistan’s forex reserves stood at $9.06 billion, reflecting a decline of $2.66 billion primarily due to external debt repayments. However, these were partly offset by fresh inflows:
- $3.1 billion in commercial loans
- Over $500 million in multilateral funding
These inflows are expected to be reflected in the SBP’s reserves by June 27, helping to restore balance and support reserve-building targets.
The SBP’s actions are in line with Pakistan’s commitments under the IMF program, which encourages “non-disruptive interventions” based on favorable market conditions. The strategy reflects a shift toward market-driven reserve accumulation rather than direct inflows or abrupt policy changes.
China’s Support Bolsters Pakistan’s Position
In a further boost, China rolled over $3.4 billion in loans, including:
- $1.3 billion in commercial loan refinancing
- $2.1 billion from reserves parked in the SBP for the past three years
Additionally, this rollover has played a key role in preventing a sharp dip in reserves, reinforcing bilateral financial cooperation between the two nations.
Additional Financing Adds Cushion
In addition to Chinese support, Pakistan secured:
- $500 million in multilateral financing
- $1 billion from Middle Eastern commercial banks
These developments offer critical breathing room as Pakistan navigates external debt obligations and works toward macroeconomic stability.
With proactive measures like targeted interbank dollar purchases and strategic international partnerships, the SBP is building a financial buffer that not only supports foreign debt repayment but also aligns with long-term economic reform goals under the IMF framework.
