State Bank of Pakistan Governor Jameel Ahmad has said that Pakistan’s current phase of macroeconomic stabilisation is expected to continue for at least the next two years, while making it clear that the central bank will not pursue aggressive or unconventional cuts in the policy interest rate. Speaking during an in-camera briefing with journalists, the governor said the country has moved beyond the most critical phase of its recent economic crisis and entered a period of relative stability marked by improved external balances, moderating inflation, and gradually recovering foreign exchange reserves.
The governor noted that Pakistan has successfully navigated the most acute stage of economic stress and restored a degree of macroeconomic balance that had been missing in recent years. He said key indicators now suggest a more predictable economic environment, allowing policymakers to focus on consolidation rather than emergency measures. According to Ahmad, the underlying momentum in the economy is expected to remain intact over the next two years, provided that discipline and consistency are maintained.
He explained that the State Bank has effectively completed the first two phases of its economic recovery framework. These phases involved stabilising the economy during the crisis period and restoring relative balance across inflation, the external account, and reserves. The next stage, he said, will involve supporting development finance initiatives aimed at encouraging sustainable and inclusive growth. While development finance is not traditionally a core responsibility of central banks, Ahmad said the SBP intends to facilitate initiatives that strengthen productive sectors and improve long-term economic resilience.
On monetary policy, the governor reiterated that maintaining stability remains the central bank’s primary objective. Responding to questions about the prime minister’s call for a bold reduction in the policy rate, Ahmad said the SBP would continue to rely on a cautious, data-driven approach. He warned that overly aggressive or unconventional easing could undermine the progress made in controlling inflation and stabilising the economy, potentially creating fresh imbalances.
Discussing growth trends, Ahmad pointed out that Pakistan’s average GDP growth over the past three decades has remained around 3.7 percent. He said the central bank does not support policies aimed at rapid expansion if they come at the expense of stability, noting that such approaches have historically led to boom-and-bust cycles. Instead, the SBP’s focus is on sustainable growth supported by structural reforms, higher productivity, and prudent macroeconomic management.
The governor highlighted notable improvements in the external sector. Pakistan’s current account deficit, which widened to 4.7 percent of GDP in 2022 with a shortfall of $17.5 billion and foreign exchange reserves falling below $16 billion, has steadily narrowed since then. The deficit declined to 3.3 percent in 2023 and further to 2.2 percent in 2024 before turning into a surplus in 2025, largely due to strong remittance inflows. Looking ahead, Ahmad expects the current account to remain within a manageable range of zero to one percent of GDP.
Inflation, he said, has stabilised within a five to seven percent range, contributing to a more predictable policy environment for businesses and investors. Foreign exchange reserves have also improved gradually, even as imports have risen alongside economic recovery. Monthly imports have increased from about $5.5 billion to nearly $6 billion, reflecting stronger domestic demand without placing undue pressure on the balance of payments.
Exports, however, present a mixed picture. Overall growth remains modest, although non-food exports are expanding at a rate of around five to six percent, suggesting some progress in diversification. In contrast, rice exports have declined sharply, falling 47 percent to $973 million during the July–December period of fiscal year 2026 compared with $1.827 billion in the same period of the previous fiscal year.
The governor said the government has introduced several measures to support exporters and industrial activity, including a reduction of Rs4.4 per unit in electricity tariffs, adjustments to the Export Finance Scheme rate, and the introduction of Blue Passports for top exporters to facilitate international business engagement. He added that these structural and fiscal measures would complement the SBP’s stabilisation efforts over time.
On reliance on the International Monetary Fund, Ahmad said future independence will depend on fiscal discipline and responsible economic behaviour after the current programme ends. Pakistan is operating under a $7 billion Extended Fund Facility scheduled to conclude between September and October 2027. He stressed that how the country manages resources and stays within its means will determine whether it can avoid repeated IMF programmes.
He also addressed the perception that lower interest rates automatically reduce the government’s financial burden. While debt servicing costs may decline, lower rates also reduce the SBP’s income from monetary operations. Last year, the central bank transferred around Rs2.4 trillion in profits to the government, a figure expected to fall to about Rs2 trillion this year due to reduced interest rates.
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