SBP says reserves rebuilt to $21.5bn through FX purchases, not borrowing
Pakistan's foreign exchange reserves have recovered from less than $3 billion in February 2023 to $21.5 billion by October 9, 2026, and the build came from the State Bank of Pakistan's own foreign exchange purchases rather than new borrowing, Governor Jameel Ahmad told foreign investors at the International Monetary Fund and World Bank annual meetings in Bangkok.
The external debt stock rose only marginally over the last three years, Ahmad said, according to a statement issued on Saturday. Forward liabilities were reduced from more than $5.7 billion to less than $1 billion. The purchases were helped by an almost balanced current account in FY26, and the central bank expects them to continue, with the current account deficit projected at 0% to 1% of GDP in FY27.
Ahmad held meetings with senior executives from JP Morgan, Citibank, Jefferies, Deutsche Bank, Barclays, Bank of America, MSCI, Standard Chartered and Mitsubishi UFJ Financial Group between October 12 and 17, alongside bilateral and multilateral partners, other central banks and global credit rating agencies. He said the economy had become more resilient to domestic and external shocks as a result of sustained macroeconomic policies and structural reforms.
Inflation fell sharply from elevated levels in FY23 to almost within the target range in FY26 despite a significant oil price shock, he said. Real GDP growth, after contracting in FY23, reached 3.7% in FY26 and is projected at 3.5% to 4.5% in FY27. Regulatory reforms, particularly for exchange companies and to encourage remittances through formal channels, have improved interbank foreign exchange liquidity.
The fiscal position has also strengthened, with the primary fiscal balance posting a third consecutive annual surplus in FY26, putting the public debt-to-GDP ratio on a downward trajectory, Ahmad said. A staff-level agreement has been reached with the IMF for reviews under the Extended Fund Facility and the Resilience and Sustainability Facility. He said continued reform implementation had improved investor confidence, led to sovereign credit rating upgrades and facilitated Pakistan's access to global capital markets, while cautioning that ongoing geopolitical developments still pose challenges.
