KARACHI: Governor State Bank of Pakistan, Jameel Ahmad, highlighting significant improvement in the national economy and its promising outlook said that the economy is headed in the right direction with recovery of economic activity and expectation of further real GDP growth in FY25.
He expressed the views during meetings with delegates from international rating agencies and key global investors during the events hosted by leading financial institutions, including Standard Chartered, JP Morgan, Bank of America, and Jefferies, on the sidelines of the 2024 IMF-World Bank annual meetings in Washington, DC, said a statement issued here on Friday.
The SBP governor provided an overview of Pakistan’s significantly improved economic indicators over the past year and pointed out that SBP’s prudent monetary policy stance and the government’s fiscal consolidation have played a crucial role in restoring macroeconomic stability in the country.
Governor acknowledging challenges faced by the global and emerging economies including Pakistan emphasized the necessity of tough yet essential policy responses to address the macroeconomic challenges.
Both the SBP and the government have implemented vital stabilization measures, which were now yielding positive results, he noted and added that inflation was on a clear downward trajectory and the external account has improved significantly, with foreign exchange buffers strengthening while overall public sector debt and gross external financing needs relative to GDP have decreased substantially.
“Inflation in Pakistan peaked at 38 percent in May 2023 and is on a downward trajectory since then – reaching 6.9 percent (y/y) in September 2024,” he stated adding that the disinflation process remained broad-based, as core inflation also witnessed a noticeable decline in recent months.
The governor highlighted that the external account has shown substantial improvement over the past 12 months, despite challenging conditions. Even with a significant increase in imports, particularly non-oil imports, and the normalization of profit/dividend repatriation by foreign investors, the external current deficit has narrowed significantly, remaining at manageable levels, he maintained.
Attributing the improvement in the current account balance to strong growth in both exports and workers’ remittances, he said that the low current account along with improved financial inflows has helped in strengthening SBP’s FX reserves from a low of $3.1 billion at the end of Jan 2023 to $11 billion as of October 11, 2024. Governor informed that SBP is targeting to increase its FX reserves to US$13 billion by end-June 2025.
Stressing the importance of structural reform agenda, supported by multilateral and bilateral partnerships under the new IMF program, he said that this comprehensive, home-grown reforms package aims to foster sustainable growth.
He shared insights into the SBP’s strategic plan for 2024-2028, which focuses on enhancing the efficiency, effectiveness, fairness, and stability of the financial system and prioritizes price stability, the buildup of FX reserves, and the development of an innovative and inclusive digital financial services ecosystem to meet modern banking needs.
