Bought More, Kept Less

September 29, 2026 (MLN): Imagine Rashid, who runs a small shop in Lahore. Last year was his best yet. Customers came back, sales picked up, and by the end of the year he had earned more than ever before.

Yet when he checked his savings, something felt off. They had grown, but by less than the year before. The reason was sitting quietly in his ledger. The instalments on his old loans had grown faster than his income. He was earning more and keeping less.

Pakistan's central bank had a year much like Rashid's.

Fresh data released yesterday by the State Bank of Pakistan shows that it bought $841 million from the interbank market in June 2026, up from $154 million in May and $502 million a year earlier. That brings its total for FY26 to $8.10 billion, about $420 million more than the $7.68 billion it bought in FY25.

In other words, the SBP gathered more dollars than the year before. On its own, that is encouraging. But, as with Rashid, the real question is how much of it stayed.

What stayed, and what slipped away

In FY25, for every dollar the SBP bought, about 67 cents stayed in its reserves. In FY26, only 48 cents did. The amount that flowed back out, largely to repay foreign loans, grew by $1.67 billion in a single year.

A simple way to picture it is a bucket. The SBP pours dollars in by buying them from the market, while debt repayments slowly drain them through a hole at the bottom. Last year, more was poured in than ever, but the hole had widened, so the bucket filled more slowly.

This helps explain a point raised in an earlier Mettis Global analysis, Why record reserves are not worth celebrating yet. That piece noted that Pakistan's reserves reached a record $21.4 billion in September largely because $4.27 billion in fresh loans arrived within two weeks. It also showed that between July 2025 and May 2026, the SBP bought $7.26 billion, but reserves rose by only $2.68 billion.

The full-year numbers now complete that picture. When steady buying can not lift reserves on its own, borrowing becomes the quickest way to fill the gap.

Yesterday's release covers June, about three months after the month ended. The SBP's purchases for July, August and September are still unknown. On September 14, the Monetary Policy Committee credited "significant FX purchases" for helping reserves pass $21 billion. The public will only be able to see that for itself when July's figure arrives around end-October, and September's around December.

Back to Rashid

Rashid is not failing. He is working hard, and his shop is doing better than ever. But until his income grows faster than his old debts, every good year will feel a little smaller than it should. And whenever his balance suddenly jumps, it will be because he took a new loan.

Pakistan's story is much the same, and so is the way out. Borrowing can buy time, and remittances from overseas workers can soften the strain, but neither can close the leak for good. Only one thing can do that is earning more dollars through exports, and earning them faster than debt repayments grow.

For now, the gap is still moving the wrong way. According to SBP data, exports rose 7.04% to $5.46 billion in the first two months of FY27. That is respectable, but imports grew almost twice as fast, rising 13.03% to $12.58 billion. As a result, the trade deficit widened 18.11% to $7.12 billion.

The effort is real, and so is the progress. But the day worth celebrating is the day Pakistan's exports, not its loans, start filling the bucket.

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