Karachi (TDI): The State Bank of Pakistan (SBP) has announced that remittances have exceeded $3 billion in October, bolstering foreign exchange reserves as the central bank anticipates an additional $500 million inflow from the Asian Development Bank (ADB) this week.
In a briefing following the monetary policy announcement, SBP Governor Jameel Ahmed revealed that the remittances for October, combined with other expected inflows, would support the government’s goal of increasing SBP reserves to $13 billion by the end of fiscal year 2025.
The remittance figures for the first quarter of FY25 are already up by 39 percent compared to the previous year.
The governor confirmed that the SBP’s foreign exchange holdings rose to $11.2 billion as of October 25, following a recent inflow of $116 million.
The upcoming ADB payment is expected to push reserves to approximately $11.7 billion.
Discussing the country’s fiscal challenges, Governor Ahmed noted that Pakistan requires $26 billion for debt servicing in FY25, with $5.7 billion already paid.
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He expressed optimism about rolling over $14.1 billion during the fiscal year but highlighted the need for an additional $6.3 billion for upcoming obligations.
He did not specify how the remaining funds would be secured but mentioned that borrowing from international markets at elevated interest rates may be necessary.
Efforts to Improve Domestic Debt Profile
The SBP governor also addressed the government’s efforts to improve its domestic debt profile.
He indicated that the government may borrow less than previously projected and is discouraging short-term treasury bills (T-bills) for domestic borrowing.
T-bills, which accounted for 21 percent of domestic debt a year ago, are now expected to comprise about 20 percent as the government shifts to longer-term borrowing strategies.
This move is aimed at reducing interest payments, projected to be between Rs8.3 trillion and Rs8.4 trillion, down from earlier estimates of Rs9.5 trillion for FY25.
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In a positive note for the economy, the governor indicated that the current account is expected to remain surplus for October, following surpluses in August and September.
This development provides critical relief for a government working to manage external debt servicing while adhering to the conditions set by the International Monetary Fund (IMF) under the new $7 billion Extended Fund Facility.
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