The State Bank of Pakistan (SBP) announced on Thursday that its foreign exchange reserves rose by $70 million to reach $11.516 billion for the week ending May 23, 2025. While this marginal increase offers some positive momentum, the central bank still faces the significant challenge of raising an additional $2.5 billion in order to meet its revised target of $14 billion by the close of the current fiscal year.
As the fiscal year draws to a close, market analysts and currency experts have begun to question whether the SBP will be able to bridge the remaining gap within the limited timeframe. With only one month remaining in FY25, the central bank is under growing pressure to secure external inflows that can bolster its reserve position and support the country’s overall macroeconomic stability.
Pakistan’s foreign exchange reserves, when including holdings by commercial banks, currently stand at $16.636 billion. Of this total, $5.12 billion is maintained by commercial banks, while the remainder is held by the SBP. Though the recent uptick in reserves is a welcome development, it is insufficient in isolation to achieve the target set for year-end.
Amid these financial pressures, there are promising signs of incoming support. Pakistan is expecting a disbursement of $1.4 billion in climate funding through the International Monetary Fund’s (IMF) Resilience and Sustainability Facility (RSF). The RSF was established to help countries strengthen their resilience to climate-related shocks while supporting sustainable development goals. The anticipated release of these funds could significantly ease the SBP’s burden if they materialize within the required timeline.
In addition, the financial sector has indicated that a potential deal may have been reached with the United Arab Emirates (UAE) to secure $1 billion in financial support. However, official confirmation of the UAE funding is still pending. Similarly, media outlets have reported that China has assured Pakistan of a rollover of $3.5 billion in existing loans, which, if confirmed, would offer critical relief to the country’s external account position. Yet, as with the UAE assistance, no official statements have been made public regarding this arrangement.
While these potential inflows are promising, financial experts remain cautious. According to senior bankers and analysts, the country could still require over $5 billion to meet debt servicing obligations in June alone. The lack of publicly available data on these obligations adds further uncertainty to Pakistan’s reserve management outlook.
The SBP’s ability to secure external funding is not just a fiscal challenge but a broader reflection of investor confidence, diplomatic engagements, and institutional credibility. With macroeconomic reforms underway and negotiations with global partners ongoing, the central bank’s reserve strategy will likely play a pivotal role in shaping Pakistan’s financial trajectory in the months ahead.
The coming weeks will be critical for the SBP and the broader economic landscape. Achieving the $14 billion reserve target is important not just as a numerical milestone but as a statement of Pakistan’s capacity to manage its economic obligations amidst a complex global financial environment. Whether the SBP can close the $2.5 billion gap will depend on timely disbursements, international cooperation, and the central bank’s strategic execution.