SBP bought $27 billion from market since 2023 to build reserves, NA panel told

The State Bank of Pakistan (SBP) Governor Jameel Ahmad told the National Assembly Standing Committee on Finance that the central bank had purchased $27 billion from the local market over the past three and a half years to strengthen foreign exchange reserves, according to a news report. 

Briefing lawmakers on the economy and progress under the International Monetary Fund (IMF) programme, the governor said the SBP had bought around $4.5 billion from the market during the current fiscal year alone.

He said Pakistan’s foreign exchange reserves were continuing to rise despite external debt repayments of around $5 billion made in April.

“Our reserves are increasing every week despite making $5 billion debt repayments in April and will soon cross $17 billion,” Ahmad told the committee.

The SBP governor said the economy was projected to grow by more than 4% during the third quarter of the current fiscal year, adding that annual growth would remain higher than last year’s 3.1% despite the impact of tensions in the Middle East.

The committee meeting, chaired by Syed Naveed Qamar, reviewed implementation of IMF-related economic targets and Pakistan’s external financing position.

According to the briefing, the SBP currently holds around $16 billion in reserves, including approximately $12 billion in deposits from Saudi Arabia and China.

During the meeting, MNA Jawed Hanif questioned the rationale behind increasing interest rates in response to inflation driven by higher oil prices and supply shocks.

Responding to the question, SBP governor said inflationary pressures were being driven by energy prices while core inflation was also rising. “Keeping in mind the 6-8% inflation path, the monetary policy committee took a prudent decision,” the he added.

According to the briefing, annual inflation rose to 10.9% in April due to global supply disruptions and the government’s decision to pass on taxes and international price increases to domestic consumers.