ISLAMABAD: Pakistan’s foreign exchange reserves have risen to a level sufficient to cover two months’ worth of imports, following the arrival of the first tranche from the International Monetary Fund (IMF) under a $7 billion Extended Fund Facility (EFF). This update was provided by State Bank of Pakistan (SBP) Governor Jameel Ahmed on Wednesday.
The SBP received $1.03 billion (SDR 760 million) on September 30, 2024, a crucial boost for the country’s struggling economy. Pakistan had been working to fulfill what have been described as “strict” conditions to finalize the loan agreement established in July, which Prime Minister Shehbaz Sharif has expressed hope will be the last such arrangement.
Currently, liquid reserves stand at $10 billion, offering much-needed stability to the nation’s foreign exchange position. Ahmed stated, “The foreign exchange reserves have stabilized, and we expect further improvements,” during a banking conference.
The governor noted that the recent IMF disbursement has alleviated pressure on the rupee and facilitated a smoother dollar supply in the market. “Overseas workers’ remittances have increased, and the supply of dollars has improved,” he said, highlighting the positive impact of declining inflation on monetary policy.
Ahmed expressed satisfaction with the government’s fiscal situation, noting a decrease in borrowing rates from banks. He dispelled concerns about delayed repayments to commercial banks, stating, “We are making early repayments of bank loans.”
Additionally, he outlined the SBP’s strategy to modernize Pakistan’s banking sector, emphasizing the importance of innovation in spurring economic growth. “We aim to launch fully digital banking by 2025,” he announced, which is expected to enhance financial inclusion for millions of Pakistanis.
The governor also shared plans to expand financing for Small and Medium Enterprises (SMEs), targeting an increase from Rs550 billion to Rs1.1 trillion over the next five years to support these critical economic drivers.
With the rising popularity of digital banking, Ahmed acknowledged the heightened risks of online fraud. He urged banks to bolster their cybersecurity measures to protect the growing user base, which currently stands at 12 million for mobile banking and is expanding at an annual rate of 70%.
He further noted that branchless banking already serves 59 million customers, and the use of mobile and internet banking is increasing, with internet banking growing at 30% annually.
Highlighting the success of Raast, Pakistan’s digital payments platform, Ahmed revealed it has processed transactions worth Rs19 trillion since its launch in 2021. “Daily transactions on Raast now exceed 2.5 million, and the system is being linked with Middle Eastern software to facilitate low-cost remittances for overseas Pakistanis,” he added, emphasizing the aim of making it easier and cheaper for expatriates to send money home.
In conclusion, Governor Ahmed reaffirmed the SBP’s commitment to fostering a modern, digitally-driven banking environment, asserting that innovation is crucial for Pakistan’s economic development.
