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State Bank of Pakistan Injects Record Rs14.304 Trillion to Ease Liquidity Pressures

Strategic Insights

— 2 min read

The State Bank of Pakistan (SBP) has taken measures to inject a record Rs14.304 trillion into the money market via conventional and Sharia-compliant open market operations (OMOs) to alleviate liquidity pressures. These pressures were caused by an increase in currency in circulation (CiC) during Eidul Azha and a delay in external inflows. The central bank used Rs13.929 trillion in conventional reverse repo purchases for seven days at an interest rate of 11.03 per cent and provided Rs375 billion in liquidity for the same period at the rate of 11.11 per cent through a Sharia-compliant Mudarabah-based OMO.

Key Takeaways:

  • The SBP pumped a record Rs14.304 trillion into the money market to ease liquidity pressures.
  • The central bank injected Rs13.929 trillion into the banking system via conventional reverse repo purchases for seven days at an interest rate of 11.03 per cent.
  • The SBP also provided Rs375 billion in liquidity for the same period at the rate of 11.11 per cent through a Sharia-compliant Mudarabah-based OMO.
  • Awais Ashraf of AKD Securities Limited believes that the SBP injects liquidity to bridge the government's financing gap after mobilizing funds through deposits, National Saving Schemes, and foreign borrowing.
  • Saad Hanif, head of research at Ismail Iqbal Securities, notes that the full acceptance of bids at the lowest quoted rate of 11.03 per cent indicates that the central bank is keeping liquidity easy and is not looking to tighten anytime soon.
  • The SBP kept its key interest rate unchanged at 11 per cent, citing the risk of increasing inflation amid rising geopolitical tensions and volatility in oil and other commodity prices.
  • The total repayment for FY25 resulted in a debt of $25.8 billion, with the remaining $400 million set to be settled within the next two weeks.
  • Pakistan expects to receive $1.4 billion in climate financing from the IMF and plans to repay the first instalment of $500 million in Eurobonds due in September this year.
  • The IMF expects the next review for Pakistan's $7 billion loan programme to occur in the second half of 2025.

Statistics:

  • Rs14.304 trillion: The record amount of liquidity injected by the SBP through conventional and Sharia-compliant OMOs.
  • Rs13.929 trillion: The amount of conventional reverse repo purchases by the SBP for seven days at an interest rate of 11.03 per cent.
  • Rs375 billion: The amount of liquidity provided by the SBP for seven days at the rate of 11.11 per cent through a Sharia-compliant Mudarabah-based OMO.
  • 11.03 per cent: The interest rate for conventional reverse repo purchases by the SBP for seven days.
  • 11.11 per cent: The interest rate for Sharia-compliant Mudarabah-based OMO by the SBP for seven days.
  • $25.8 billion: The total repayment for FY25.
  • $400 million: The remaining amount to be settled by Pakistan within the next two weeks.
  • $1 billion: The amount of financing agreement signed by Pakistan with the Asian Development Bank (ADB).
  • $1.4 billion: The amount of climate financing expected to be received by Pakistan from the IMF.

Sources:

  • SBP Governor Jameel Ahmad
  • Awais Ashraf, director of research at AKD Securities Limited
  • Saad Hanif, head of research at Ismail Iqbal Securities
  • [Source: Dawn, "SBP injects record Rs14.304 trillion to ease liquidity pressures"]

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