SBP expects reserves to reach $18 billion as FY26 remittances approach $42 billion

The State Bank of Pakistan expects its foreign exchange reserves to reach the $18 billion target by the end of fiscal year 2025-26, supported by remittances projected to approach $42 billion.

SBP Governor Jameel Ahmad told analysts after the monetary policy meeting that most external debt repayments due during FY26 had either been completed, rolled over or refinanced.

Around $700 million remains payable over the next two weeks, he said.

The central bank expects remittances to exceed $41 billion and approach $42 billion during the outgoing fiscal year, in line with estimates issued in January.

It also expects the upward trend in remittance inflows to continue.

The SBP projects the current account deficit to remain near the lower end of its previously estimated range of zero to 1% of gross domestic product for FY26.

Strong workers’ remittances and inflows through Roshan Digital Accounts have supported the external account despite an increase in petroleum imports.

The central bank said official inflows had helped Pakistan meet external payment obligations while enabling continued foreign currency purchases and a buildup in reserves.

The SBP’s forward foreign exchange liabilities have declined to $1.2 billion, below the $1.5 billion ceiling set under Pakistan’s programme with the International Monetary Fund.

The central bank expects the impact of concessionary financing announced in the federal budget to remain limited because of the relatively small size of the schemes and their conditional disbursement requirements.

Most of the financing programmes are designed to support exports or expand export-oriented production capacity, which the SBP expects to contribute to industrial activity.

Banks are currently offering financing under the Export Finance Scheme at 4.5%.

According to the central bank, banks are absorbing a one-percentage-point cost under the scheme following the increase in interest rates in April.