Governor State Bank of Pakistan Jameel Ahmad has underscored the critical need for Pakistan to move away from repeated cycles of temporary stabilisation toward a durable and outward-focused growth model. Speaking at the opening session of the Pakistan Business Council’s Dialogue on the Economy, he stated that Pakistan has historically experienced phases of short-lived growth followed by periods of painful stabilisation. He noted that the present moment offers a real opportunity for long-term transformation, provided that policy continuity remains consistent and the private sector adapts to evolving economic conditions. Ahmad pointed out that the country is positioned at a turning point where sustainable progress will depend on long-term vision rather than short-term fixes.
During his remarks, Ahmad outlined why the current stabilisation phase differs from earlier cycles. He highlighted that macroeconomic discipline is now supported by coordinated monetary and fiscal policies, avoiding premature policy relaxation that previously undermined stability. He explained that the central bank’s improved forecasting capacity now helps guide decisions based on eight-quarter projections rather than short-term indicators. The governor said inflation has declined in line with expectations and is projected to remain within the medium-term target range of 5 to 7 percent, which reflects improved policy management. A key component of this stability, he added, is the qualitative strengthening of external buffers that are not dependent on debt-driven inflows.
Ahmad shared that the buildup in foreign exchange reserves is primarily the result of strategic FX purchases and lower forward liabilities, rather than borrowing. Since 2022, public sector external debt has remained largely stable, while the external debt-to-GDP ratio has declined from 31 percent to 26 percent. Over the same period, SBP’s reserves rose from a critically low 2.9 billion dollars to around 14.5 billion dollars, marking a significant improvement in economic resilience. He emphasized that sustainable growth will not be possible unless policymaking shifts toward a long-term vision aimed at socioeconomic prosperity rather than short bursts of consumption-led growth. He said this shift is reflected in long-term reforms initiated by the government and SBP under a homegrown policy framework.
On the fiscal side, Ahmad noted that the government’s consistent achievement of primary surpluses over the last three years has helped place public debt indicators on a more sustainable path, an outcome rarely witnessed in the past. He also highlighted structural reforms such as efforts to increase the tax-to-GDP ratio through documentation and widening the tax base, along with energy sector reforms aimed at lowering energy costs. He explained that these efforts are complemented by SBP initiatives focused on improving financial intermediation and advancing financial inclusion across the country.
Looking forward, Ahmad said Pakistan’s economic model must evolve to avoid another boom-bust cycle. He stated that historical growth averages of 3 to 4 percent are insufficient for a population exceeding 250 million. Calling this an inflection point, he urged the private sector to adopt global competitiveness rather than rely on subsidies or domestic protection. He encouraged businesses to integrate into global value chains, modernise production, and explore opportunities with partners such as the United States, China, and Middle Eastern economies. He stressed the importance of innovation, diversification of funding sources, access to capital markets, and the adoption of advanced digital tools. Ahmad placed particular emphasis on documenting supply chains to boost productivity, enhance access to finance, and strengthen resilience.
He concluded by stating that sustained prosperity requires joint commitment from the government, SBP, and the private sector. He remarked that stability must now serve as the foundation for long-term, inclusive growth, rather than being viewed as an endpoint.
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