SBP Expects Reserves to Stay Above $9 Billion by End-June Despite $1 Billion Repayment

The State Bank of Pakistan (SBP) expects foreign exchange reserves to stay above $9 billion by end-June 2024 despite repayments of around $1 billion in the remaining days of the month. According to the post Monetary Policy Committee (MPC) analyst briefing notes shared by Topline Securities, during 11MFY24, SBP has repaid $10.7 billion while another $1bn will be repaid in June 2024. This will take total repayments to $11.7 billion for FY24. This is in addition to the rollovers of $11-12 billion in FY24, suggesting a gross requirement of $22.7-23.7 billion. Separately, in July 2024, external repayments were close to $2 billion, while in the SBP liquidity data sheet, repayments for June and July 2024 were $10.2 billion. The central bank clarified that the rest of the amount will be rolled over. Moreover, SBP has cleared most of the backlog of the dividends and profit repatriation. In May 2024, dividend payments were around $1 billion, taking total payments FY24 till now to around $2 billion. On the question related to variation in data of SBP and IMF over repayments/amortization of foreign payments, SBP mentioned that the difference is due to the treatment of numbers. As per SBP, IMF doesn’t account for some of the maturities and this shouldn’t be a cause of concern. Further, SBP highlighted that external repayment data to SBP is provided by the Economic Affairs Division and this is the same body that provides data to IMF as well. SBP mentioned that room for further cuts in interest rate will be dependent on post-budgetary and IMF measures assessment. In the current rate cut, SBP has modeled the budget and IMF measures known to them. However, actual measures will cause deviation in the inflation outlook.