No dearth of dollars for imports; Economy improving, inflation to drop further
The State Bank of Pakistan Governor, Jameel Ahmed, on Thursday said the country was meeting its economic targets, with its debt level and balance of payments still under control.
During a press briefing, the SBP chief highlighted that the country’s external debt level had remained the same as it was in 2022.
“Overall, Pakistan’s foreign debt volume has improved significantly,” he said, highlighting that the actual foreign debt stood at more than $100.08 billion.
“Foreign debt has also increased by $500 million due to revaluation of debt,” he stated, adding that he hoped that “Pakistan’s current account will remain in surplus in December as well”.
He added that the money borrowed this year was mostly through multilateral institutions and that short-term debt was being paid by long-term debt.
“[As a result], debt servicing would improve and the balance of payments situation will be better,” he said.
Ahmed highlighted that the biggest challenge faced by the authorities was the balance of payments, however, he said the country had enough dollars to meet external demands.
“The issue of balance of payments rises when we exceed growth by 4pc and we don’t have the foreign exchange component capacity to meet that, then that growth turns unsustainable,” he explained, adding that the balance of payment issue also impacted industries.
“Growth should be sustainable because if it’s not sustainable, we will be back to square one,” he said, highlighting that exports would need to be increased to make growth sustainable.
On the business side, the SBP chief said business confidence would improve and foreign direct investment would follow once the economy improved.
Furthermore, Ahmed said that there were little hiccups in foreign investors’ profit repatriation, highlighting that while the foreign investors’ dividend repatriated stood at $331m, in 2024 $2.2bn were repatriated.
“This year, $1.1bn have been already repatriated — as of right now, foreign investors don’t have an issue with dividend repatriation,” he said.
“This year’s current account and inflation will be better, as I already told you inflation may have some fluctuations,” he said.
The SBP chief reiterated that the central bank’s inflation target was estimated to be 5 to 7pc, adding that if “the pace of inflation is controlled, then other things will also be better”.
The CPI inflation had surged above 10pc in November 2021 and remained in double digits for 33 consecutive months until July. In between, it peaked at 38pc in May 2023, driven by unprecedented food and energy prices.
On other positive developments, Ahmed said that remittances were stabilising and were expected to cross $35bn in this financial year.
Jameel Ahmed stated that the country is on track to meet its economic targets, with its debt levels and balance of payments remaining under control.
Speaking at the FPCCI, Ahmad said that inflation is expected to decline further in January, while interest rates will also decrease due to improvements in debt repayment
The governor attributed the positive trends to an increase in exports and remittances, which have contributed to a better current account balance. He emphasized the need to further boost exports, as this will lead to improvements in the current account and balance of payments.
