External account healthier despite global turmoil: SBP

Governor says remittances set to cross $41b, new currency notes sent to cabinet for approval

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External account healthier despite global turmoil: SBP

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KARACHI:

State Bank of Pakistan (SBP) Governor Jameel Ahmad on Friday declared that Pakistan's economy had undergone a remarkable turnaround over the last three years, with foreign exchange reserves soaring from a critically low $3 billion to $17 billion, remittances set to cross a historic $41 billion mark and the country's external account returning to stability despite global turbulence and Middle East tensions.

Addressing an interactive session during his visit to the Karachi Chamber of Commerce and Industry (KCCI), the governor said economic situation today was vastly different from the crisis-like conditions witnessed in 2023 when imports sharply contracted and businesses were struggling to open Letters of Credit (LCs).

"Average monthly imports have now crossed $5 billion compared to nearly $3 billion three years ago, while the LC situation has improved substantially," he stated.

Ahmad said the State Bank's reforms, coupled with stringent action against Hundi and Hawala, had played a vital role in stabilising the economy and strengthening foreign exchange reserves. Remittances, which stood at $38 billion last fiscal year, are expected to exceed $41 billion during the current year.

He noted that Pakistan's current account remained in surplus during the first nine months of FY26 and the overall deficit was expected to remain between zero and 1%. "Pakistan's external account is now in a much stronger and healthier position," he remarked.

In a major disclosure, the governor said that designs of new currency notes had been finalised and sent to the federal cabinet for approval. He clarified that exchange company rates were determined entirely by market forces and the State Bank had no direct role in fixing exchange rates. He also confirmed that progress was underway on the licensing and regulation framework for virtual assets in Pakistan.

On economic growth, the central bank governor said the Pakistan Bureau of Statistics estimated the GDP growth at 3.7% during the first nine months of the current fiscal year, while the State Bank projected annual growth between 3.75% and 4.75%. Global uncertainties and oil prices, however, could impact growth during the final quarter.

Warning of temporary inflationary pressures, Ahmad said inflation could exceed 7% during the last quarter of FY26; however, the State Bank remained committed to restricting inflation within the medium-term target range of 5-7%. He expressed confidence that inflation would gradually decline going forward.

Highlighting the State Bank's renewed focus on Small and Medium Enterprises (SMEs), he said regulations had been simplified, procedural hurdles reduced and banks directed to formulate dedicated SME growth plans. SME financing surged from Rs491 billion in June 2024 to Rs882 billion by December 2025, while the target is to increase it to Rs1.5 trillion by June 2028.

"Pakistan's future GDP growth is directly linked with SME expansion," he emphasised, adding that the State Bank had also introduced a simplified one-page loan application form for SMEs.

Discussing exports, the governor stated that global economic conditions and declining international commodity prices had negatively impacted export performance. While rice shipments of $3.5 billion significantly boosted exports last year, falling global rice prices reduced export earnings by nearly $1 billion this year.

Exports, he said, were estimated at around $30 billion this year compared to $32 billion last year, although the government was actively pursuing measures to reverse the trend and positive results were expected within the next two months.