SBP Reserves Rise to $17.19 Billion But Pakistan's Total Forex Cover Slips to 2.76 Months

ISLAMABAD: According to State Bank of Pakistan, there was a rise of 43.4 million dollars in the foreign exchange reserves of the bank for the week ended on May 29, 2026, raising the foreign exchange reserves of the central bank to 17.19 billion dollars. The foreign exchange reserves of Pakistan for May 2026 give an ambiguous result; while the reserves of the State Bank have shown slight improvement, the overall trend is negative in the sense that the total liquid foreign exchange reserves of Pakistan have dropped by 10.5 million dollars to 22.64 billion dollars due to lower reserves held by the commercial banks. Import cover has come down from 2.87 months to 2.76 months.

Why does the SBP reserve figure and the total figure differ?

The Pakistan foreign exchange reserve data provided for May 2026 is divided into two independent categories. One category consists of reserves held by the State Bank of Pakistan, which have been acquired mainly via IMF loans and central bank transactions, while the other consists of foreign exchange reserves held by commercial banks, which come from their customers' deposits. In the event that the reserves held by the State Bank of Pakistan increase but the total foreign exchange reserves decrease, it is safe to assume that the commercial banks have fallen.

External pressures on Pakistan's reserves position
Pakistan's external account faces pressure from multiple directions simultaneously in mid-2026. The US-Iran war has disrupted LNG supply routes and driven up energy import costs. The current account deficit, while narrower than its 2022–23 peak, remains a persistent drain on foreign exchange. Debt repayment obligations continue to absorb a meaningful share of inflows. And while remittances from overseas Pakistanis remain strong, they must offset an import bill that energy price shocks have kept elevated. Against this backdrop, a modest weekly gain in SBP reserves reflects ongoing IMF programme support — not a fundamental improvement in the underlying external position.

All Pakistan foreign exchange reserves ratios as at May 2026 are practically significant in terms of economic sustainability, with the most significant being import cover. Currently, Pakistan’s import cover ratio stands at only 2.76 months, far lower than the minimum required three-month standard that international financial organizations consider necessary for developing nations. The recent reduction from 2.87 months to 2.76 months is not critical, but it takes Pakistan further from, rather than towards, adequacy.

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Implications of the Numbers Leading into the Budget

The Pakistan foreign exchange reserves situation for the month of May 2026 is available four days prior to the budget presentation that is scheduled for the 10th of June. IMF considers the reserve position of Pakistan a critical conditional requirement, and a decline in the import coverage ratio by just a few weeks underlines the importance of its insistence upon financial prudence, low import growth, and accumulation of reserves.

For the average Pakistani citizen, the amount of reserves held by the country has a direct correlation with the strength of the rupee, price of foreign goods, and continuation of the IMF assistance program. Maintaining $17 billion worth of reserves by the SBP is good enough, but an import cover of just 2.76 months means that there is hardly any margin left to absorb any kind of external shock faced by the economy of Pakistan time and again. It will be the trend observed in the coming few weeks that decides whether this week's figures mark a dip or an increase in external pressures.