Pakistan’s Foreign Reserves Surge to $16.04bn in January 2025

Islamabad – Pakistan’s total foreign exchange reserves reached $16.04 billion by the end of January 2025, marking a $2.05 billion increase since June 2024, when reserves stood at $13.99 billion.

Despite this positive growth, the $11.42 billion held by the State Bank of Pakistan (SBP) still falls short of covering three months of import bills. The remaining $4.63 billion is held by commercial banks.

Key Factors Behind the Reserve Growth

The increase in foreign reserves has been primarily driven by:

✅ Loans from the International Monetary Fund (IMF) ????
✅ Rollover of foreign debts from China, Saudi Arabia, and the UAE ????
✅ Saudi Arabia’s agreement to provide $1.2 billion worth of oil on deferred payments ????️

Inflation Drops to a Decade Low

In a positive economic shift, Pakistan’s consumer inflation dropped to 2.4% in January 2025, the lowest in 10 years. This marks a significant decline from 4.1% in December 2024 and 12.6% in June 2024.

With inflation easing, the SBP has already reduced the key interest rate from 22% in May 2024 to 12% by January 2025, and further cuts may be considered to stimulate economic activity.

Economic Outlook

While the rise in reserves provides temporary relief, Pakistan still faces challenges in sustaining economic stability, particularly in ensuring adequate import coverage and managing external debt obligations.