Governor SBP, Mr. Jameel Ahmad, met 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. The Governor provided an overview of Pakistan’s significantly improved economic indicators over the past year, emphasizing a promising economic outlook. He pointed out that SBP’s prudent monetary policy stance and the government’s fiscal consolidation have restored macroeconomic stability.
The governor acknowledged the challenges the global and emerging economies, including Pakistan, faced and emphasized the necessity of tough yet essential policy responses to address these macroeconomic challenges. He noted that SBP and the government had implemented vital stabilization measures, yielding positive results. Mr. Ahmad added that inflation has peaked and is now on a clear downward trajectory. The external account has improved significantly, with foreign exchange buffers strengthening. Moreover, overall public sector debt and gross external financing needs relative to GDP have decreased substantially. Economic activity is also recovering, and real GDP growth is expected to improve further in the current fiscal year. He concluded that the economy is headed in the right direction.
Mr Ahmad explained that inflation in Pakistan peaked at 38 per cent in May 2023 and has been on a downward trajectory since then – reaching 6.9 per cent (y/y) in September 2024. He added that the disinflation process remained broad-based, as core inflation also witnessed a noticeable decline in recent months. The governor highlighted that, despite challenging conditions, the external account has shown substantial improvement over the past 12 months. Even with a significant increase in imports, particularly non-oil imports, and foreign investors’ normalization of profit/dividend repatriation, the external current deficit has narrowed significantly, remaining at manageable levels. The improvement in the current account balance is primarily attributed to strong growth in exports and workers’ remittances. This low current account and improved financial inflows have helped strengthen SBP’s FX reserves from a low of US$3.1 billion at the end of Jan 2023 to US$11 billion as of October 11, 2024. The governor said SBP will increase its FX reserves to US$13 billion by June 2025.
Looking ahead, Mr. Ahmad stressed the importance of the structural reform agenda, supported by multilateral and bilateral partnerships under the new IMF program. This comprehensive, home-grown reform package aims to foster sustainable growth. He shared insights into the SBP’s strategic plan for 2024-2028, which 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. The plan enhances the economic system’s efficiency, effectiveness, fairness, and stability.
