State Bank of Pakistan (SBP) Governor Jameel Ahmad met delegates from international rating agencies and key global investors during events hosted by leading financial institutions including Standard Chartered, JPMorgan, the Bank of America, and Jefferies, on the sidelines of 2024 IMF-World Bank annual meetings in Washington DC.
The governor provided an overview of Pakistan's significantly improved economic indicators over the past year, emphasising a promising economic outlook. He pointed out that SBP's prudent monetary policy stance alongside the government's fiscal consolidation has played a crucial role in restoring macroeconomic stability in the country.
The governor acknowledged the challenges faced by global and emerging economies like Pakistan, and emphasised the necessity of tough yet essential policy responses to address these macroeconomic challenges.
He noted that both the SBP and the government have implemented vital stabilisation measures, which are now yielding positive results. The external account has improved significantly, with foreign exchange buffers strengthening.
Moreover, both overall public sector debt and gross external financing needs relative to the gross domestic product (GDP) have decreased substantially. Economic activity is also recovering with real GDP growth expected to improve further in the current fiscal year. He concluded that as such, the economy is headed in the right direction.
Ahmad explained that inflation in Pakistan peaked at 38% in May 2023 and has been on a downward trajectory since then, reaching 6.9% year-on-year in September 2024. He added that the disinflation process remained broad-based, as core inflation also recorded a noticeable decline in recent months.
The governor highlighted that despite challenging conditions, the external account has shown substantial improvement over the past 12 months. Even with a significant increase in imports, particularly non-oil imports, and the normalisation of profit/dividend repatriation by foreign investors, the external deficit has narrowed significantly, remaining at manageable levels.
The improvement in the current account balance is primarily attributed to strong growth in both exports and workers' remittances. The low current account deficit along with improved financial inflows has helped in strengthening SBP's forex reserves from a low of $3.1 billion at the end of January 2023 to $11 billion as of October 11, 2024.
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