The State Bank of Pakistan (SBP) reported that it had purchased $5.9 billion from the currency market since June 2024. This increased its foreign exchange reserves to $11.5 billion, following a $1 billion inflow from the IMF on May 16.
Despite strong remittances and support from the IMF and its allies, the SBP did not meet its initial reserve targets. Therefore, it has revised its fiscal year 2025 goal to $14 billion and adjusted its remittance estimate to $38 billion.
In February alone, the State Bank of Pakistan (SBP) purchased $223 million, bringing the total to $5.9 billion by the end of the month. This increase was largely due to high remittance inflows from overseas Pakistanis, with half of the rise attributed to market interventions. The SBP’s aggressive buying strategy, which could potentially set a record for fiscal year 2025, aims to stabilise the rupee amidst a $1.88 billion current account surplus from July 2024 to April 2025.
IMF Funding and Regional Support
Under the $7 billion Extended Fund Facility, Pakistan is expecting a $1.4 billion climate funding tranche from the IMF’s Resilience and Sustainability Facility. Additionally, financial experts report a $1 billion deal with the UAE, which is anticipated to be finalised by June and will help strengthen reserves. Although import restrictions remain in place, these inflows are supporting Pakistan’s liquidity, contributing to a record trade deficit in April.
Despite a strong regional stance amid tensions with India, foreign direct investment (FDI) from July 2024 to April 2025 has declined slightly compared to last year’s levels. Economic growth continues to be sluggish, with unemployment increasing over the past three years. However, analysts see potential for long-term investment if regional stability is maintained. Currency dealers have observed the State Bank of Pakistan’s strict import controls, which have affected profit repatriation.
Economist Dr. Bilal Khan from LUMS states, “SBP’s dollar purchases strengthen reserves but strain import-dependent sectors. Sustainable growth requires FDI and export boosts.” With remittances and IMF support, SBP aims for $14 billion in reserves by June 2025.
