SBP governor seems very optimistic about economy

KARACHI: Jameel Ahmad, Governor of the State Bank of Pakistan (SBP), has reaffirmed the SBP’s dedication to stabilizing key economic indicators and supporting growth-driven initiatives to bolster Pakistan’s economy.

Addressing the business community at Federation House on Thursday, Governor SBP highlighted the importance of improved policy measures, which have set the stage for the full restoration of economic activities across the country. He also said the State Bank remains focused on achieving medium-term economic stability, emphasizing collaboration with the business community to address challenges and unlock Pakistan’s economic potential.

He maintained with a tight monetary stance inflation has dropped significantly from its peak of 38 percent in the first half of 2023 to 4.1 percent in December 2024 and will continue the declining trend in January as well. However, inflation is expected to rise again over the next four to five months, starting from February, driven by higher demand, he added.

Inflation to lower pace further in January, says SBP governor

“The state bank is working towards stabilizing prices and overall inflation is expected to remain within the target range of 5-7 percent by the end of 2025, aligning with the medium-term goals of the central bank and the government,” he added.

The SBP is closely monitoring inflation and last month, the Monetary Policy Committee (MPC) reduced the key policy rate by 200 basis points to 13 percent, marking the fifth consecutive cut since June 2024, when the policy rate was 22 percent.

He mentioned that in January 2023, businesses, particularly imports, faced significant challenges and foreign exchange reserves stood at $3 billion and monthly remittances fell to $2 billion. However, substantial improvement has been made and now the SBP’s reserves have reached over $11 billion mark.

Jameel Ahmad said remittances and export growth have put the current account in a favorable position, with remittances projected to reach $35 billion by end of FY25.

However, Pakistan’s exports have not met expectations, necessitating urgent measures to boost growth. Without export growth, challenges in the current account and balance of payments will persist and enhanced exports are vital for resolving current account and payment balance issues, he maintained.

“The current account deficit was $17.5 billion or 4.7 percent of GDP in 2022 and now current account is in surplus with support of healthy home remittances inflows and export growth. The current account surplus is expected to persist during the current fiscal year,” he added.

Governor SBP said foreign exchange reserves and liquidity in the forex market have significantly improved, that there is no liquidity issue in the forex market and SBP is actively addressing import-related challenges and external account issues to stimulate economic growth.

He said that there has been overall improvement in debt servicing and the country’s debt was near $100 billion by June 2022 and it remained at $100.08 billion by September 2024.

Governor SBP also urged commercial banks to take additional steps to support SMEs (Small and Medium Enterprises), as their growth generates employment opportunities and positively impacts the revival of economic activities. In order to encourage the banks for SME financing, its targeted to increase from 543 billion to 1100 billion

He also emphasized the importance of engaging with the business community to resolve issues and achieve a higher growth rate.

President Pakistan Chambers of Commerce & Industry (FPCCI) Atif Ikram Sheikh urged prioritizing local industry and reducing the policy rate to 9 percent. He also advocated for easing financing for women entrepreneurs and including FPCCI representatives in the Monetary Policy Committee.

On the occasion, Saleem Ullah Deputy Governor SBP, Saqib Fayyaz Magoon Senior Vice President FPCCI, Arif Habib, Ahmed Chinoy, and other prominent business figures were also present.

Copyright Business Recorder, 2025