Jameel Ahmed, Governor of the State Bank of Pakistan, has underscored the critical role of sustained policy and regulatory reforms in stabilizing Pakistan’s economy and setting the stage for renewed growth. Addressing the 9th Annual Microfinance Conference, organised by the Pakistan Microfinance Network, he outlined how a combination of tough measures, improved monetary discipline, and targeted interventions has strengthened the macroeconomic foundation.
He noted that the country’s economic growth is now on a recovery path and is expected to pick up pace during the current fiscal year. The conference, held under the theme “Renaissance of Microfinance”, focused on financial inclusion and the expanding role of microfinance in supporting economic resilience and community-level development.
Jameel Ahmed highlighted several encouraging macroeconomic developments achieved through coordinated fiscal and monetary actions. Inflation has declined significantly and is expected to remain within the government’s target band of 5 to 7 percent over the medium term, despite potential upward pressure due to recent flood impacts. He emphasized that easing inflationary pressures provide the space to support productive economic activity and encourage investment.
He also pointed to a notable build-up in the country’s foreign exchange reserves, which are now nearly five times higher than they were in February 2023. This accumulation, driven by strategic interbank foreign exchange purchases, has reduced the need for high-cost borrowing to meet debt obligations. According to him, this proactive approach has improved Pakistan’s external financing position and strengthened debt sustainability.
While acknowledging challenges, including agricultural losses caused by floods, the governor expressed confidence that the economic growth momentum will accelerate in FY26. He stressed that sustained growth depends on maintaining stability, encouraging private investment, and deepening financial access for underserved communities.
Jameel Ahmed also announced several regulatory reforms to boost the microfinance sector. The SBP is revising the Prudential Regulations for Microfinance Banks, moving from a rigid rules-based framework to a more flexible principle-based approach. This shift removes previous restrictions on micro-enterprise lending, introduces a dedicated Agriculture and Livestock loan category, and raises loan ceilings to Rs5 million for agriculture, micro-enterprise, and housing finance. Additionally, general loan limits have been increased to Rs500,000.
Recognizing the growing impact of climate change on financial inclusion, the central bank has also launched a Climate Risk Fund under the World Bank-funded Resilient and Accessible Microfinance Project. This fund is designed to support two million borrowers through liquidity facilities that help mitigate climate-related shocks and preserve financial stability in vulnerable communities.
To further strengthen access to credit for marginalized groups, the SBP has introduced a Risk Coverage Scheme for small farmers and underserved regions, offering 10 percent first-loss coverage and operational incentives to encourage lending in areas including Balochistan, Khyber Pakhtunkhwa, Azad Jammu and Kashmir, and Gilgit-Baltistan.
These measures reflect a broader policy approach aimed at ensuring inclusive economic recovery, encouraging micro and small enterprise growth, and supporting vulnerable segments of society. By expanding credit access and enhancing financial sector resilience, the central bank aims to create an enabling environment for sustainable development.
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