The State Bank of Pakistan (SBP) purchased $8.78 billion from the interbank foreign exchange market during the 12 months from August 2025 to July 2026 as part of its efforts to strengthen foreign exchange reserves and meet the country’s external debt repayment obligations. According to central bank data, the purchases included $863 million in July 2026, compared with $841 million in June. The latest figures highlight the central bank’s continued efforts to build foreign exchange buffers while managing Pakistan’s external financing requirements. The SBP has maintained its target of increasing foreign exchange reserves to $25 billion by June 2027, with an interim target of $23 billion by December 2026.
The reserve accumulation strategy comes amid inflationary pressures and changing external economic conditions. The SBP recently increased its policy rate by 50 basis points to 12%, citing inflationary risks associated with higher international oil prices amid escalating conflict in the Middle East. Alongside the monetary policy adjustment, the central bank revised its forecast for workers’ remittances during the current fiscal year to $45 billion from the previous projection of $44 billion. Remittances remain an important source of foreign exchange for Pakistan, helping support the country’s external payments position. The higher forecast reflects the central bank’s updated expectations for inflows from overseas Pakistanis, while the reserve targets establish its objectives for strengthening the country’s external financial position over the coming months.
According to the reported figures, Pakistan’s foreign exchange reserves stood at approximately $21.5 billion as of October 16, 2026, providing cover for around three months of imports. Speaking after the monetary policy announcement, SBP Governor Jameel Ahmad said the reserve targets had been set while accounting for external debt repayments and financing requirements arising from the current account deficit. The central bank must balance the accumulation of foreign exchange reserves with the need to meet scheduled external payments, including debt servicing obligations. Ahmad also said the SBP had purchased approximately $30 billion from the foreign exchange market over the preceding three years, with a significant portion used to meet external debt repayments and other financing needs.
Pakistan’s external debt servicing requirements remain a major consideration in the management of its foreign exchange position. The SBP reported external debt obligations of $21.5 billion, of which $7.3 billion in principal repayments had been rolled over and approximately $5 billion had been repaid. Around $5 billion remained outstanding, according to the reported figures. The central bank had also received communication concerning the rollover of $3 billion in Saudi deposits that were due for repayment. Debt rollovers allow borrowers to extend repayment obligations rather than settle the full amount immediately, helping manage short-term financing pressures. However, the country’s ability to maintain adequate reserves continues to depend on external inflows, repayment schedules and the availability of financing from bilateral and multilateral partners.
The composition of Pakistan’s external debt has also changed, according to the central bank. Multilateral and bilateral lenders now account for approximately 80% of the country’s external debt, compared with 55% in 2023. The SBP said this shift had helped ease near-term repayment pressures. Financing from multilateral institutions and bilateral partners can provide a different repayment profile from other forms of external borrowing, although the actual impact depends on the terms and maturity schedules of individual obligations. The changing composition of the debt portfolio is therefore an important factor in assessing Pakistan’s external financing requirements and the pressure these obligations place on foreign exchange reserves.
The SBP’s foreign exchange purchases, remittance projections and reserve targets form part of a broader effort to strengthen Pakistan’s external financial buffers. The central bank aims to raise reserves to $23 billion by December 2026 and $25 billion by June 2027, while managing external debt repayments and the current account financing gap. Governor Ahmad said Pakistan’s external position had improved significantly and that further reserve accumulation would strengthen its capacity to manage external financial pressures. Reaching the stated targets will depend on the pace of foreign exchange inflows, remittance receipts, external financing arrangements and the timing of debt repayments. The latest data indicate that the central bank continues to prioritise reserve accumulation while balancing the country’s immediate external payment requirements with its longer-term financial stability objectives.
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