State Bank of Pakistan (SBP) Governor Jameel Ahmad has projected that the country’s economy will grow between 3.75% and 4.75% in fiscal year 2026, pointing to a gradual recovery supported by improving macroeconomic indicators and easing financial conditions. His remarks were delivered during a meeting of the Agricultural Credit Advisory Committee (ACAC), convened to review the performance of agricultural lending and related policy measures.
According to the SBP chief, Pakistan has regained macroeconomic stability and is now progressing toward a more sustainable growth trajectory. He noted that GDP growth in the first quarter of FY26 stood at 3.7%, with the full-year projection maintained within the 3.75% to 4.75% range. The growth outlook reflects stabilizing economic conditions following a period marked by external imbalances and inflationary pressures.
Inflation trends have also shown improvement. General inflation declined to 5.8% in January 2026, signaling easing price pressures compared to previous highs. The moderation in inflation comes amid tighter fiscal management and a recalibrated monetary policy stance over the past year and a half.
Governor Ahmad highlighted that financial conditions have eased considerably following a cumulative 1,150 basis point reduction in the policy rate since June 2024. In a written response to Reuters, he stated that the full transmission of these rate cuts is still filtering through the economy. The easing cycle, he noted, is supporting economic expansion while maintaining price and financial stability. Despite expectations of a further cut, the central bank last month decided to hold the benchmark interest rate at 10.5%. The decision comes at a sensitive juncture as Pakistan continues to navigate its $7 billion IMF-supported program after emerging from a balance-of-payments crisis.
Agricultural finance featured prominently in the ACAC meeting. The SBP governor reported that a record Rs2.58 trillion in agricultural loans was disbursed in FY25, marking a 16% year-on-year increase. In the first half of FY26 alone, banks extended Rs1,412 billion in agri loans, while the number of borrowers rose to 2.97 million. The expansion in credit underscores the banking sector’s growing role in supporting rural economic activity and farm productivity.
Governor Ahmad emphasized the importance of the Zarkhez-e scheme in broadening access to agricultural finance, particularly for underserved segments. The initiative is intended to streamline credit availability and improve outreach in rural areas, strengthening financial inclusion within the agricultural value chain.
The ACAC also reviewed measures to promote electronic warehouse receipt financing as a tool to enhance post-harvest liquidity. This mechanism allows farmers to store produce and use warehouse receipts as collateral for financing, reducing the need for immediate crop sales at potentially unfavorable prices. By mitigating forced selling, the system aims to stabilize farm incomes and improve linkages between producers and markets.
Taken together, the SBP’s growth projections, easing inflation, and expanded agricultural lending reflect a broader effort to consolidate macroeconomic gains while supporting productive sectors. As monetary transmission continues and structural reforms advance under the IMF framework, policymakers are positioning the economy for steady expansion anchored in stability and improved credit flows.
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