The State Bank of Pakistan’s (SBP) foreign exchange reserves dropped sharply by $2.66 billion, reaching $9.06 billion as of June 20, 2025. This marks the biggest weekly decline in over three years, driven mainly by external debt repayments, including commercial loans.
The last time such a steep fall occurred was in March 2022, when reserves fell by $2.9 billion. This latest decline pushes SBP reserves to an 11-month low, adding pressure to Pakistan’s external position. Overall, the country’s total liquid reserves stand at $14.39 billion, with commercial banks holding $5.33 billion.
The SBP clarified that the drop was due to scheduled repayment of foreign commercial borrowing by the Government of Pakistan. However, the central bank expects some relief, as it received $3.1 billion in new commercial loans and over $500 million in multilateral inflows this week, which will be reflected in the reserves data for the week ending June 27.
Earlier this year, SBP Governor Jameel Ahmad raised the June-end target for foreign exchange reserves to $14 billion, slightly higher than the previous projection of $13 billion. However, experts now believe this target is unlikely to be met, given the current outflow and timeline.
Last week, SBP reserves were at $11.72 billion after a minor increase of $46 million. The recent plunge highlights the fragile nature of Pakistan’s external finances, as the country balances loan inflows and repayments under tight fiscal pressure.