KARACHI: Governor State Bank of Pakistan (SBP), Mr. Jameel Ahmad has emphasized the urgent need for
Pakistan to transition from short-lived stabilization efforts to a durable, sustainable, and outward-
looking growth model. Speaking at the opening session of the Pakistan Business Council’s (PBC)
‘Dialogue on the Economy,’ Mr. Jameel Ahmad highlighted that while Pakistan has repeatedly cycled
through phases of growth followed by painful stabilization, this moment presents a genuine
opportunity for long-term transformation, provided policy continuity and private sector adaptability
remain at the forefront.
Mr. Ahmad outlined why the current stabilization phase stands apart from previous cycles. He noted
that macroeconomic discipline is now underpinned by well-coordinated and forward-looking
monetary and fiscal policies, avoiding the premature easing that historically undermined stability. The
central bank’s enhanced forecasting capacity, he added, has allowed policymakers to anchor
decisions in eight-quarter projections rather than short-term indicators. ’Inflation has not only fallen
in line with our forecast but is expected to remain within the 5–7 percent target band over the
medium term,’ he affirmed.
A major pillar of improved stability, Mr. Ahmad stressed, is the qualitative strengthening of external
buffers. Unlike past reliance on debt-driven inflows, recent reserve accumulation reflects strategic FX
purchases and reduced forward liabilities. Public sector external debt has remained broadly stable
since 2022, while the external debt-to-GDP ratio has declined from 31 percent to 26 percent. During
the same period, SBP’s FX reserves have risen from a critically low USD2.9 billion to roughly USD 14.5
billion, a nearly fivefold increase.
He shared that there is a growing recognition that sustainable growth will remain elusive until
policymaking is reoriented towards a long-term vision of achieving socioeconomic prosperity for our
people instead of looking for short-term consumption led growth spurts of the past. He added that
this shift is reflected in the long-term reforms initiated by the government and the SBP under our
homegrown policy framework. On the fiscal side, the Governor noted that the government’s
consistent achievement of primary surpluses over the last three years has helped put public debt
indicators on a sustainable path—an outcome rarely seen in the past. He added that the government
is implementing long-term structural reforms, including increasing tax to GDP ratio through
documentation and widening of the tax base, and energy sector reforms to lower the cost of energy.
The Governor added that these reforms are complemented by the SBP continued efforts to address
gaps in financial intermediation and increasing financial inclusion across the country.
Looking ahead, Mr. Ahmad underscored that Pakistan’s economic model must evolve to prevent yet
another boom-bust cycle. He added that historical growth averages—hovering around 3–4
percent—can no longer support a nation of over 250 million people. ‘Pakistan stands at an inflection
point,’ he said, calling on the private sector to embrace global competitiveness rather than depend on
subsidies or domestic market protection.
