SBP Bought $9 Billion From Market to Stabilize Forex Reserves Last Year: Governor SBP

The State Bank of Pakistan (SBP) purchased a record $9 billion from the local market in 2024 to maintain foreign exchange reserves despite limited foreign loan inflows, according to Governor Jameel Ahmad. He told journalists after the Senate Finance Committee on Monday that $4.5 billion of these purchases occurred in the second half of the year. SBP spent roughly Rs. 2.5 trillion at current exchange rates to buy $9 billion from the market. The reserves were kept above $11 billion in the first half of the fiscal year and without these purchases, they could have fallen below $3 billion and worsened inflation further, the governor added. The governor defended the move since it was market-based rather than debt-driven. The purchases also prevented external public debt from surpassing $101 billion, although Pakistan’s total external debt hit $133 billion by year-end. Jameel said these actions created a dollar surplus, stabilizing the exchange rate. The senate committee discussed local payments made to Visa and MasterCard and seemed irked over how Pakistani banks paid these companies $277 million in fees from 287 million transactions, despite them being conducted locally. The committee chairman urged  SBP to halt such payments. The committee also demanded a detailed review of the Pakistan Remittance Initiative as 80 percent of its Rs. 86 billion budget is spent on overseas incentives rather than promoting local remittances.