Pakistan's Economy on the Path to Sustainable Growth, Says Governor Jameel Ahmad

Strategic Insights -

The State Bank of Pakistan (SBP) Governor Jameel Ahmad expressed the central bank's commitment to undertaking structural reforms, laying the foundation for sustainable and inclusive economic growth. Speaking at the launch ceremony of the Women Entrepreneurs Finance Code in Karachi, Ahmad emphasized the importance of transitioning from economic stability to medium-term economic transformation. He noted that the country's prudent monetary policy stance, fundamentals-aligned exchange rate, and ongoing fiscal consolidation are helping to ensure overall macroeconomic stability and support sustainable economic growth.

Key Takeaways:

  • The average headline inflation has declined to 4.5 percent in FY25, the lowest level in the last nine years, and is expected to stabilize within the target range of 5-7 percent.
  • The FX market remains stable, driven by external account outperformance and a high-quality buildup of FX reserve buffers, with SBP's FX reserves almost five times higher than the low levels at the start of 2023.
  • The current account balance is projected to remain supportive, driven by robust remittances and resilient exports, despite rapid growth in both the value and volume of imports.
  • Fiscal policy has proactively supported monetary tightening, as reflected in the second consecutive primary surplus in FY25, with both tax and non-tax revenues showing sizable growth and overall expenditures remaining relatively contained.
  • The government is targeting a higher primary surplus for FY26, and economic growth is showing signs of gradual, consistent, and sustainable recovery.
  • Supporting women entrepreneurs is a key priority for the SBP, as they are a powerful engine for economic growth and social progress.
  • The Women Entrepreneurs Finance Code is a global initiative aimed at promoting women's financial inclusion and entrepreneurship, and the SBP has introduced several initiatives to promote women's financial inclusion, including the National Financial Inclusion Strategy (NFIS) and the Banking on Equality Policy (BOE).

Statistics:

  • Average headline inflation: 4.5 percent in FY25, the lowest level in the last nine years.
  • SBP's FX reserves: almost five times higher than the low levels at the start of 2023.
  • Current account balance: projected to remain supportive, driven by robust remittances and resilient exports.
  • Fiscal policy: second consecutive primary surplus in FY25, with both tax and non-tax revenues showing sizable growth and overall expenditures remaining relatively contained.
  • GDP growth: showing signs of gradual, consistent, and sustainable recovery.

Sources:

  • "State Bank of Pakistan Press Release: Women Entrepreneurs Finance Code"
  • Asian Development Bank (ADB) website: [ADB](www.adb.org/)
  • World Bank website: [World Bank](www.worldbank.org/)
  • Pakistan Bureau of Statistics (PBS) website: [PBS](www.pbs.gov.pk/)