Pakistan’s central bank closed out its fiscal year with a milestone few would have bet on three years ago. During the week ending July 3, the State Bank of Pakistan’s own foreign exchange holdings jumped by $1.94 billion to $18.47 billion, pushing the country’s total liquid reserves, central bank plus commercial banks combined, to $23.99 billion. Both figures mark the strongest position the country has held since 2021.
The more striking number is the trajectory behind it. As recently as February 2023, Pakistan’s reserves had shrunk to below $3 billion, covering barely two weeks of imports and pushing the country to the edge of a sovereign default scare. Getting from there to $18 billion in the space of three years is a sixfold increase, and it happened without the kind of single dramatic rescue package that usually accompanies a reserve turnaround of that size.
$27 Billion Bought, Not Borrowed
What sets Pakistan’s case apart from most reserve-crisis recoveries is the mechanism. According to the central bank’s own account, the rebuild wasn’t primarily financed through new borrowing. The SBP instead purchased more than $27 billion directly from the interbank market over the past three years, using those dollars both to retire external debt and to build the buffer simultaneously. That is a meaningfully different route to the same destination other crisis economies have reached through IMF disbursements and bondholder restructurings.
It wasn’t achieved in isolation from the Fund, either. Pakistan’s reserve accumulation has run alongside a $7 billion IMF Extended Fund Facility, with the IMF board clearing $1.32 billion in fresh disbursements in May 2026 and lifting total program disbursements to about $4.8 billion. The IMF anchor set the conditions and the credibility backdrop; the market purchases did the actual work of filling the reserve tank.
Current Account Surplus Backs Up the Buffer
The purchases alone wouldn’t have been sustainable if the underlying external position were still deteriorating. Pakistan’s current account ran a surplus of $255 million over the first eleven months of FY26, and the central bank governor has said he expects the full fiscal year to close in balance or modest surplus for the second consecutive year. A reserve number built on borrowed time depends on financing arriving faster than the country spends it. A reserve number built on a genuinely improved balance of payments doesn’t. Pakistan’s case now looks like the second kind: the country has largely stopped needing to draw dollars down in the first place, rather than simply having more of them flow in.
That distinction is the same one that separates durable reserve rebuilds from temporary reprieves everywhere they occur. A currency allowed to find its level, an external anchor large enough to cover the financing gap while reforms take hold, and a domestic account tight enough that reserves stop leaking back out, that combination has produced some of the most closely studied reserve rebuilds of the past several years, and Pakistan’s own version of it is now running at a pace few forecasters had priced in.
Twenty Billion Is the Next Marker
SBP Governor Jameel Ahmad has set the next target publicly: reserves exceeding $20.2 billion by the end of December 2026. The bank has already added roughly $2.5 billion in the space of two weeks through government inflows and interbank purchases. Hitting the December target looks less like a stretch goal now than a formality.
The harder test, as with every reserve rebuild, is what happens once the easy dollars stop arriving. Pakistan absorbed roughly $9 billion in external debt repayments during the final quarter of FY26 alone without its reserve position buckling, a departure from prior crises, when a single large repayment was often enough to trigger a fresh bout of instability. Whether that resilience holds through the next external shock, rather than just the current calm stretch, will determine whether this rebuild joins the list of genuinely durable ones or becomes another cautionary footnote.
