Pakistan's forex reserves expected to reach $11.5bn: SBP governor
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MPC assessed that near-term inflation may remain volatile before stabilising within target range
KARACHI (Dunya News) - State Bank of Pakistan Governor Jameel Ahmad said on Monday the reduction in interest expense led to savings of Rs1,300 billion.
“The amount is equivalent to 1pc of gross domestic product (GDP),” the SBP chief said at a briefing.
The government's total interest expense for the fiscal year 2025 was estimated to be Rs8,500 billion compared with Rs9,800 billion projected in the budget for the current fiscal year.
He said the reduction in interest rates and the timely use of surplus funds for debt profiling was expected to lower the government’s debt servicing costs in FY25, he said.
He said the Asian Development Bank (ADB) was likely to disburse around $500 million to Pakistan which would increase the forex reserves to more than $11.5 billion.
The reserves could reach $13 billion by June 2025, he said.
Analysts said the governor highlighted a positive trend in Pakistan's external position during the first four months of the current fiscal year.
The remittances for October are estimated to exceed $3 billion. This development is anticipated to reduce the current account deficit to a negligible level for the July-October period.
Earlier, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) revised down the policy rate by 250 basis points to 15 percent, effective from Nov 5.
The committee noted that inflation had declined faster than expected and reached close to its medium-term target range in October.
The committee assessed that the tight monetary policy stance continued to play an important role in sustaining the downward trend in inflation.
Moreover, a sharp decline in food inflation, favourable global oil prices and absence of expected adjustments in gas tariffs and PDL rates have accelerated the pace of disinflation in recent months.
Taking into account the inherent risks associated with these factors, the MPC assessed that the near-term inflation may remain volatile before stabilising within the target range.
