KARACHI: The State Bank of Pakistan (SBP) increased its foreign exchange reserves by $4.2 billion during calendar year 2025, though the pace of accumulation slowed in the year’s second half. Official data show SBP’s reserves stood at $11.7bn on Jan 3, 2025, rising to $15.915bn by the end of December — an increase of $4.2bn. However, reserves grew by only $1.4bn in the second half of the year, from $14.5bn on June 30 to $15.9bn at year-end. While the overall increase has strengthened external buffers and supported the exchange rate, a significant portion of the reserves comprises loans from friendly countries. The central bank aims to raise reserves beyond $18bn by the end of FY26, but the slower accumulation in recent months has raised concerns. Despite record remittance inflows providing space for dollar purchases from the interbank market, reserve growth remained modest. During January-September 2025, the SBP purchased $4.2bn from the market, reflecting a lower level of buying compared to last year. Over the previous 16 months, the central bank had purchased $9.7bn, which helped rebuild reserves. Gains slow in second half as pace of accumulation slows down The higher reserves contributed to exchange rate stability, enabling the economy to remain relatively steady despite weak economic growth and rising poverty. Analysts warn that the second half of FY26 (January-June) could prove challenging, with the country facing large loan rollovers, the need to curb the trade deficit, boost GDP growth and create jobs for millions of skilled and unskilled workers. In its weekly statement, the SBP reported that its reserves rose by $13 million to $15.915bn in the week ended Dec 26, 2025. Total liquid foreign reserves held by the country stood at $21.012bn, including $5.097bn with commercial banks. Exchange Companies Association of Pakistan Chairman Malik Bostan said 2025 was relatively more stable than 2024, noting that the rupee remained firm against the US dollar. Since the IMF’s earlier agreements, volatility in the dollar had been contained, he added. Despite historically low investment levels, Mr Bostan said investor confidence had improved, though he cautioned that stagnant export growth remained a key concern. Economists and analysts also point out that despite higher reserves and a stable exchange rate, the country has yet to attract sufficient domestic and foreign investment to revive economic activity and achieve higher growth. Published in Dawn, January 2nd, 2026