SBP Governor Briefs Global Investors on Pakistan’s Economic Outlook

During the 2024 IMF-World Bank annual meetings in Washington, DC, State Bank of Pakistan (SBP) Governor Jameel Ahmad met with delegates from international rating agencies and leading global investors, hosted by prominent financial institutions such as Standard Chartered, JP Morgan, Bank of America, and Jefferies.

Key Highlights

In his briefing, Governor Ahmad outlined the notable improvements in Pakistan’s economic indicators over the past year, highlighting a positive economic outlook. He attributed this progress to the SBP’s prudent monetary policies and the government’s fiscal consolidation efforts, which have been instrumental in restoring macroeconomic stability.

The governor acknowledged the challenges that both global and emerging economies, including Pakistan, are currently facing. He emphasized the need for tough but necessary policy responses to tackle these macroeconomic issues. According to him, the stabilization measures implemented by both the SBP and the government are beginning to yield favorable results.

Economic Recovery and Future Prospects

Governor Ahmad noted that inflation, which peaked at 38% in May 2023, is now on a downward trend, currently recorded at 6.9% year-over-year in September 2024. He remarked that the disinflation process has been broad-based, with core inflation also witnessing significant declines in recent months.

He reported substantial improvements in the external account, with foreign exchange buffers strengthening. Notably, overall public sector debt and gross external financing needs relative to GDP have decreased. The economy is expected to continue recovering, with real GDP growth projected to improve further in the current fiscal year.

Despite a significant rise in imports, particularly non-oil imports, and the normalization of profit and dividend repatriations by foreign investors, the external current deficit has narrowed considerably and remains at manageable levels. This positive shift is primarily due to robust growth in exports and workers’ remittances.

The SBP’s foreign exchange reserves have seen a significant increase, rising from a low of $3.1 billion at the end of January 2023 to $11 billion as of October 11, 2024. The governor indicated that the SBP aims to further boost its FX reserves to $13 billion by June 2025.

Strategic Vision

Looking ahead, Governor Ahmad emphasized the importance of a structural reform agenda, supported by multilateral and bilateral partnerships under the new IMF program. He shared insights into the SBP’s strategic plan for 2024-2028, which focuses on ensuring price stability, building foreign exchange reserves, and developing an innovative and inclusive digital financial services ecosystem to meet contemporary banking needs. Additionally, the plan aims to enhance the efficiency, effectiveness, fairness, and stability of the financial system