Pakistan’s economy, which only two years ago faced one of the toughest periods in its history, has shown remarkable signs of recovery. The country was battling record inflation, fast-depleting foreign exchange reserves, and severe pressure on its external accounts. Inflation had spiked to 38 percent in May 2023, while reserves dropped to a dangerously low level of $4.4 billion, raising fears of default. Today, the landscape is notably different, as the State Bank of Pakistan (SBP) highlights an economic turnaround driven by strict monetary discipline, structural reforms, and stronger external inflows.
Speaking at the Independence Day ceremony in Karachi, SBP Governor Jameel Ahmad underlined that Pakistan has managed to triple its foreign exchange reserves without accumulating new debt. The central bank chief said that inflation has now been brought down to historically low levels, reserves stand at $14.5 billion, and the country has achieved a current account surplus for the first time in 14 years.
Governor Ahmad recalled the unprecedented challenges of the past two years, but emphasized that corrective policies and fiscal discipline have paved the way for stability. Inflation, which once soared near 40 percent, has dropped steadily to 11.8 percent in May 2024 and further down to 3.2 percent by June 2025, marking a significant improvement in price stability. To respond to the improving outlook, the SBP gradually cut its policy rate in seven phases from 22 percent to 11 percent since mid-2024. Ahmad stated that the central bank will continue to ensure inflation remains within the target band of 5–7 percent to support sustainable growth and business confidence.
On the external front, Pakistan’s foreign exchange reserves have risen from $4.4 billion at the end of FY23 to $14.5 billion by the close of FY25. Crucially, this gain was achieved without adding new foreign debt, easing concerns about the sustainability of external obligations. The current account has posted a surplus of $2.1 billion, a development not seen since 2011. At the same time, remittances from overseas Pakistanis reached a record $38.3 billion, providing further stability to the external sector.
The governor noted that international credit rating agencies have upgraded Pakistan’s standing, reflecting improved economic fundamentals. These upgrades, he said, will help unlock new foreign investment opportunities and strengthen Pakistan’s image in global financial markets.
Highlighting the role of innovation, Ahmad also spoke about the SBP’s initiatives in digital finance. Among the measures is the transformation of Raast, the instant payment system, into a standalone subsidiary to scale adoption and enhance service offerings. The central bank has also modernised its payment infrastructure to make digital transactions more accessible and secure for citizens. Furthermore, an updated framework now allows account opening without visiting a bank branch, a step that is expected to particularly benefit women and underserved groups.
Governor Ahmad stressed that these reforms are designed not only to address immediate challenges but also to create long-term resilience in the economy. By combining fiscal discipline with digital financial innovation, the SBP is aiming to build a more sustainable growth model. The Independence Day address, therefore, served as both a reflection on the difficulties of the past and a roadmap for a more stable and inclusive economic future.