SBP-held forex reserves rise, but external financing woes persist

• Country's total liquid foreign reserves stand at $15.95 billion.
• Commercial banks' dollar reserves amount to $4.75 billion.
• External debt repayments put pressure on forex reserves.

Foreign exchange reserves, held by the State Bank of Pakistan (SBP), increased $35 million during the week ending February 14, reaching $11.20 billion, the latest numbers showed on Thursday, amid continued pressure on the country’s external financing needs.

The country's total liquid foreign reserves stood at $15.95 billion in the period under review. The central bank, however, did not specify the source of these inflows. Meanwhile, commercial banks' dollar reserves amounted to $4.75 billion.

The central bank’s foreign exchange reserves decreased $252 million to $11.17 billion during the week ended February 7, due to external debt repayments.

The total liquid foreign reserves held by the country dropped $181 million to $15.863 billion. However, the commercial banks' reserves jumped $70 million to $4.696 billion in the previous week.

The country’s external account has improved due to a surge in remittances and improved exports. However, external debt repayments put pressure on the forex reserves.

Earlier this month, Fitch Ratings said Pakistan's external financing needs will remain significant in the coming year, despite progress in rebuilding its foreign exchange reserves.

The country needs to repay over $22 billion in external debt in the fiscal year 2025, including nearly $13 billion in bilateral deposits, Fitch said. "Securing sufficient external financing remains a challenge, considering large maturities and lenders’ existing exposures," said the credit ratings agency.

Pakistan is undergoing reforms under a $7 billion IMF programme, which is up for its first review later this month. The programme aims to help Pakistan address deep-rooted economic issues such as its large fiscal and current account deficits.

"Deteriorating external liquidity, for example, linked to delays in IMF reviews, could lead to negative action," the rating agency said noting that Pakistan has made progress in rebuilding its foreign exchange reserves, outperforming targets set by the IMF.