Pakistan’s foreign exchange reserves have surged to their highest level since March 2022, reaching USD 21.1 billion. The latest data reveals that the State Bank of Pakistan (SBP) holds USD 15.9 billion, a significant improvement that marks a crucial milestone for the country’s economy.
Read More: Foreign reserves surge over $21 billion
This increase in reserves has been largely driven by domestic growth and enhanced investor confidence, rather than relying on external borrowing. Analysts highlight that the country’s import coverage now exceeds 2.6 months, a stark improvement from just under two weeks in February 2023. This reflects Pakistan’s strengthened financial position and reduced vulnerabilities.
The ratio of external debt to GDP has also seen a reduction from 31% to 26%, indicating a steady move toward financial discipline and sustainability. The rise in reserves, experts say, is a sign of a clear and sustained economic recovery, not a temporary fix.
In 2023, Pakistan’s reserves had plunged to just USD 2.9 billion, but they have since multiplied nearly 5.5 times. Additionally, the country’s forward foreign exchange liabilities have dropped by approximately 65%, signaling reduced future financial pressures. This is in contrast to the period between 2015 and 2022, when Pakistan saw rising debt and declining reserves.
Experts believe this progress is a reflection of Pakistan’s improved economic fundamentals, including stronger reserves, growing business confidence, and overall financial stability. The reduction in external debt, combined with the rising reserves, is seen as a positive signal for Pakistan’s long-term economic outlook.