SBP’s foreign reserves rise to $11.5 billion as deficit shrinks

Pakistan's foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $70 million to $11.5 billion in the week ending May 23, according to central bank data released Thursday.

Net reserves held by commercial banks stood at $5.12 billion, bringing the country’s total liquid foreign reserves to $16.6 billion.

The current account deficit for the 2025 fiscal year is now estimated at $0.2 billion, or 0.1% of GDP, supported by steady exports and stronger-than-expected remittances amid improved macroeconomic stability. Over the medium term, the deficit is expected to widen modestly to about 1% of GDP as imports recover.

Gross reserves are projected to strengthen further, backed by committed multilateral and bilateral financing, including an expected $1.3 billion disbursement under the IMF’s Resilience and Sustainability Facility.

Since June 2024, the SBP has purchased $5.9 billion from the currency market to bolster reserves, despite financial support from the International Monetary Fund and allied nations. While higher remittance inflows provided room for dollar purchases, the central bank fell short of its initial reserve accumulation target.

Following stronger-than-expected remittances from overseas Pakistanis, the SBP revised its foreign exchange reserves target to $14 billion and remittance projections to $38 billion for FY25.