The State Bank of Pakistan (SBP) reported a significant fall in its foreign exchange reserves, with a decline of over $2.66 billion in a single week ending June 20, 2025. The reduction was largely attributed to substantial external debt repayments, particularly in the form of commercial borrowing settlements by the government of Pakistan.
According to SBP’s weekly report released on Thursday, the central bank’s foreign exchange reserves fell to $9.065 billion on June 20, down from $11.72 billion recorded a week earlier on June 13. This marks the most pronounced weekly decline in reserves in over three years and raised immediate concerns about the country’s external financing position.
The SBP clarified that this sharp reduction was driven by the need to fulfill scheduled debt repayments and emphasized that this was a one-off impact. Officials confirmed that over $2.6 billion had been utilized to honor external obligations, reflecting the central bank’s ongoing commitment to meeting debt servicing timelines without delays.
Despite the sharp fall, the SBP has indicated that a substantial recovery in reserves is expected shortly. Over $3 billion in fresh inflows from commercial and multilateral sources have already been received during the current week, although these figures will only be reflected in the reserves data for the week ending June 27, 2025.
“During the current week, SBP has received the government of Pakistan’s commercial loans amounting to $3.1 billion and additional multilateral loans exceeding $500 million,” the central bank stated. These incoming funds are expected to offset the earlier decline and bolster reserve levels going into the final stretch of the fiscal year.
The reserves held by commercial banks showed a slight improvement during the same period. Net foreign exchange reserves maintained by commercial banks rose by $50 million, reaching $5.333 billion by the end of last week, up from $5.283 billion a week prior.
Taking into account both SBP and commercial bank holdings, Pakistan’s total liquid foreign exchange reserves stood at $14.4 billion as of June 20, 2025, marking a decrease of $2.6 billion from the $17 billion reported on June 13.
SBP Governor Jameel Ahmed remains confident that the country’s foreign exchange reserves will recover strongly in the coming days. He expressed optimism that reserve levels could rise to $14 billion by the end of the fiscal year 2024–25, backed by continued inflows and macroeconomic stability.
Analysts have noted that while the reserve drawdown was steep, it highlights Pakistan’s capacity to manage its external obligations without triggering financial instability. Despite the slow pace of foreign inflows throughout the fiscal year, the country has managed to honor debt commitments, which bodes well for its credit credibility in global financial markets.
As the central bank prepares to update its next weekly reserves data, market watchers and economic stakeholders will be closely monitoring the reflection of the newly received inflows. The incoming weeks will be critical for determining whether SBP can maintain a sustainable buffer amid ongoing fiscal and external account pressures.