Pakistan’s foreign exchange reserves saw a steep decline of $2.66 billion in just one week, largely due to repayments made to Chinese and other international commercial banks, according to the latest data released by the State Bank of Pakistan (SBP).
As per the report, the SBP’s dollar reserves fell sharply from $11.72 billion to $9.65 billion during the week, highlighting the country’s ongoing struggle with external debt obligations and balance of payment pressures.
Despite the significant drop in central bank reserves, deposits held by commercial banks witnessed a modest increase of $50 million, reaching $5.33 billion. This brings Pakistan’s total foreign exchange reserves to $14.40 billion.
Key factors behind the decline
Banking sector sources indicated that the primary reason for the sharp fall was loan repayments made to foreign lenders, including Chinese and other commercial banks. These outflows were part of scheduled debt servicing.
However, in a positive development, officials revealed that some of Pakistan’s commercial loans were rescheduled, allowing the country to recover funds earlier paid out. Additionally, Pakistan received $500 million in loans from the World Bank and the Asian Development Bank (ADB) to support economic reforms and financial stabilization.
Furthermore, new commercial loans worth $3.1 billion have also been secured by the government. These inflows are expected to be reflected in the next weekly forex report ending June 27, potentially improving the reserve position temporarily.
