KARACHI: Pakistan’s central bank foreign exchange reserves rose to $14.51 billion by the end of June, an increase of $5.12 billion over the previous fiscal year, the State Bank of Pakistan (SBP) said on Wednesday, marking a key milestone as the country closed out its 2024-25 financial year.
The new figure exceeds the International Monetary Fund’s (IMF) June 2025 reserves target under Pakistan’s ongoing $7 billion Extended Fund Facility (EFF), and reflects a significant turnaround in the country’s external account after years of balance-of-payments stress.
Pakistan’s forex reserves stood at $9.39 billion at the end of FY24, and have now climbed to their highest level since early 2018. The increase also pushes Pakistan’s import cover — a key indicator of external sector strength — to 2.5 months, up from 1.7 months a year ago and less than one month during the 2022-23 crisis period.
The rise in reserves was driven largely by non-debt inflows, including improved exports, growth in IT services, higher foreign direct investment, and record remittances from overseas Pakistanis, according to government finance adviser Khurram Schehzad.
“Reserves rising. Debt falling. Stability strengthening,” Schehzad posted on X, formerly Twitter, noting that the central bank’s reserves now exceed the IMF’s end-June target.
He added that the debt-to-GDP ratio has declined from 75 percent in FY23 to an estimated 69 percent in FY25, reflecting improved macroeconomic management.
Pakistan entered FY25 facing a challenging external financing outlook, with over $20 billion in debt repayments due during the year. However, a combination of improved current account discipline, fiscal consolidation, and bilateral inflows helped ease pressure on the rupee and shore up confidence in the central bank’s position.
Pakistan’s economy grew an estimated 2.4 percent in FY25, up from 0.3 percent in the previous fiscal year, as inflation cooled and the rupee stabilized after a steep depreciation cycle in 2022-23. The IMF has encouraged Pakistan to maintain exchange rate flexibility and strengthen domestic revenue collection in order to ensure macroeconomic resilience.
The improvement in external buffers is likely to boost investor sentiment at a time when the government is stepping up efforts to attract foreign direct investment and privatize state-owned enterprises.
Further inflows, particularly from Gulf countries and China, are expected in the first half of FY26, which could help Pakistan meet its gross financing needs without resorting to expensive commercial borrowing.
Despite the progress, risks remain. Pakistan’s external debt servicing burden remains high, and its ability to maintain reserve adequacy will depend on continued inflows and fiscal discipline.
Still, the end-June reserve level marks a notable turnaround from just two years ago when Pakistan was on the brink of default and foreign reserves had fallen below $4 billion, barely enough for three weeks of imports.
With reserves now exceeding $14.5 billion, the country has gained critical breathing space to manage its external obligations and restore market confidence.
