In a significant move to combat counterfeiting and bolster the security of Pakistan’s currency, the State Bank of Pakistan (SBP) has announced plans to begin the printing of new currency notes in the fiscal year 2025-26. This step will mark the introduction of advanced security features aimed at safeguarding the nation’s financial system. The design process for these upgraded notes is already underway, with the expectation that the final designs will be completed by the end of the current fiscal year, FY25. Once the design phase concludes, production is slated to commence in FY26.
According to insights provided by Arif Habib Limited, the SBP Governor confirmed that the central bank has already taken the necessary steps to improve the security features of the country’s currency. These efforts are expected to address growing concerns over the circulation of counterfeit currency, with the new notes set to offer enhanced security features that would make it more difficult to replicate them.
This move to introduce new currency notes comes at a time when Pakistan is grappling with substantial external debt obligations, forecasted to reach a staggering USD 26.1 billion in FY25. These obligations include USD 22.1 billion in principal repayments and USD 4 billion in interest payments. Of this amount, USD 12.3 billion is expected to be rolled over, while USD 3.7 billion is anticipated to be secured through commercial loans. The remaining USD 10.1 billion, which includes USD 6.4 billion already repaid, will require settlement over the next five months. The central bank plans to meet these requirements through a combination of commercial and multilateral loans.
Amidst these fiscal challenges, the SBP has projected real GDP growth to range between 2.5% and 3.5% for FY25. Inflation is expected to average between 5.5% and 7.5%, with headline inflation declining but core inflation remaining persistent. This persistent inflationary pressure is driven by factors such as volatile global oil prices, ongoing supply chain disruptions, and domestic taxation policies. The SBP anticipates that inflationary pressures will increase in the final quarter of FY25 due to the base effect.
Looking at the external front, the SBP projects that Pakistan’s foreign exchange reserves will exceed USD 13 billion by the end of FY25, a notable improvement from the current level of USD 11.4 billion. This is seen as a positive development for the country’s financial stability, as improved reserves will help the nation manage its external obligations. Additionally, the SBP forecasts that the current account balance will remain relatively stable, within the range of -0.5% to +0.5%, primarily driven by better-than-expected reserve accumulation and reduced repayment obligations in the latter half of FY25.
Despite these positive indicators, high-frequency economic data suggests that while an overall recovery is underway, certain sectors, such as construction, continue to lag behind. As Pakistan navigates through these economic challenges, the SBP also anticipates a decline in its profits for FY26 compared to FY25, primarily due to expected reductions in interest rates.
These developments reflect Pakistan’s concerted efforts to stabilize its economy and enhance financial resilience in the face of external and internal challenges. By introducing new currency notes and continuing to focus on economic reforms, the government and SBP are aiming to reinforce the nation’s financial infrastructure and secure its economic future.
The announcement of the new currency notes with enhanced security features signals a proactive approach by Pakistan’s central bank to address ongoing economic challenges, strengthen financial systems, and ensure greater financial inclusion for all citizens in the years ahead.