SBP showcases recovery at IMF huddle

Ahmad projects 3% GDP growth, highlights inflation control, growing reserves, and structural reforms

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KARACHI:

Governor of the State Bank of Pakistan (SBP), Jameel Ahmad, reaffirmed Pakistan's improving macroeconomic stability and positive outlook during a series of high-level meetings with senior executives from some of the world's leading financial and investment institutions, including JP Morgan, Standard Chartered, Deutsche Bank, Jefferies, and major credit rating agencies, held on the sidelines of the International Monetary Fund–World Bank Spring Meetings in Washington, DC.

According to a press statement issued on Saturday, the SBP governor provided a detailed briefing to participants, outlining the tangible and substantial progress Pakistan has made in stabilising its economy over the past two years. He highlighted that a prudent and well-calibrated monetary policy stance, complemented by sustained fiscal consolidation efforts, has successfully led to enhanced macroeconomic stability and a stronger economic foundation for the country.

Ahmad underlined that headline inflation has witnessed a sharp and historic decline, reaching a multi-decade low of just 0.7 percent in March 2025, while core inflation has also dropped significantly from levels exceeding 22 percent to a manageable single-digit figure, with expectations for further moderation in the coming months. Looking ahead, he projected that headline inflation would stabilise firmly within the government's target range of 5 to 7 percent, he said.

Turning to Pakistan's external account, the SBP governor informed participants that the country's foreign exchange (FX) buffers have registered both substantial qualitative and quantitative improvements. He noted that the SBP's FX reserves have more than tripled since their lowest point in February 2023, while the bank's forward liabilities have also seen a significant reduction.

Crucially, Ahmad pointed out that, unlike in previous periods of reserve accumulation, the current increase in external buffers has not been driven by further accumulation of external debt. Instead, Pakistan's public sector external debt, measured both in absolute terms and as a percentage of GDP, has actually declined since June 2022.

Ahmad emphasised that this positive trend reflects the SBP's strategic policy focus on building economic resilience against external shocks, including the current environment of global trade uncertainty. He explained that the SBP has managed to build FX reserves primarily through proactive FX purchases in the interbank market, facilitated by a surplus in the external current account, and shared that the central bank is targeting an FX reserves level of $14 billion by June 2025.

Further elaborating on the improving economic conditions, the SBP governor stated that Pakistan's GDP growth is gradually recovering and is expected to reach around 3 percent during the fiscal year 2025. He added that these economic improvements have been acknowledged and positively noted by international credit rating agencies, reflecting growing confidence in Pakistan's economic trajectory.

Highlighting the broader reform agenda, the SBP governor reiterated that policymakers have remained steadfast in their focus on preserving macroeconomic stability while simultaneously undertaking structural reforms across various sectors of the economy. Expressing his confidence in Pakistan's future, Ahmad concluded that with continued commitment to reforms, Pakistan is well-positioned to achieve sustainable economic growth and long-term socioeconomic uplift for its population.