KARACHI: Despite difficult conditions, Pakistan’s external account has improved significantly since October 2023, State Bank of Pakistan Governor Jamil Ahmed said.
Hence, the Central Bank Governor expects the country’s foreign exchange reserves to reach $13 billion by the end of the current fiscal year.
This came during a meeting on the sidelines of the 2024 annual meetings of the International Monetary Fund and the World Bank in Washington, DC. News I mentioned.
Ahmed has held meetings with representatives of leading international investors and international rating agencies at events hosted by leading financial companies, including Standard Chartered Bank, JP Morgan, Bank of America, and Jefferies.
The governor stated that over the past 12 months, there has been a noticeable improvement in the external account, according to a statement issued by the State Bank of Pakistan. Despite the noticeable increase in imports, especially non-oil imports, and the return of profits from foreign investors to their homelands, the external current deficit decreased significantly and remained within manageable levels.
According to Ahmed, the strong rise in both exports and workers’ remittances is the main reason for the improvement in the current account balance. As of October 11, 2024, the State Bank of Pakistan’s foreign exchange reserves have grown from a low of $3.1 billion at the end of January 2023 to $11 billion thanks to a decline in the current account and improved financial flows.
He informed that the Reserve Bank of Pakistan aims to increase its foreign exchange reserves to $13 billion by the end of June 2025.
Ahmed said that foreign exchange reserves are strengthening. He noted that the State Bank of Pakistan’s prudent monetary policy stance and fiscal consolidation of the government played a crucial role in restoring macroeconomic stability in the country.
The Governor acknowledged the challenges faced by global and emerging economies, including Pakistan, and stressed the need for tough but necessary policy responses to address these macroeconomic challenges. He noted that both the State Bank of Pakistan and the government have implemented vital stabilization measures, which are now yielding positive results.
Ahmed added that inflation has reached its peak and is now on a clear downward path. Moreover, total public sector debt and total external financing needs relative to GDP have declined significantly. Economic activity is also picking up, and real GDP growth is expected to improve further in the current fiscal year. He concluded that the economy is moving in the right direction.
Ahmed explained that inflation in Pakistan peaked at 38% in May 2023 and has been on a downward trajectory since then – reaching 6.9% (on an annual basis) in September 2024. He added that the process of reducing inflation remained broad-based, as core inflation as It has witnessed a noticeable decline in recent months.
Looking to the future, Ahmed stressed the importance of the structural reform agenda, supported by multilateral and bilateral partnerships under the new IMF programme. This comprehensive domestic reform package aims to promote sustainable growth. and exchanged ideas on the Strategic Plan of the Strategic Bank of Pakistan for the period 2024-2028, which prioritizes price stability, accumulation of foreign exchange reserves, and development of an innovative and comprehensive digital financial services ecosystem to meet modern banking needs.
The plan also focuses on enhancing the efficiency, effectiveness, fairness and stability of the financial system.