SBP chief credits policy actions for economic improvement

KARACHI: Governor State Bank of Pakistan (SBP) Jameel Ahmad said on Tuesday that various economic indicators have begun to show signs of improvement, with inflation slowing, exports picking up, and foreign exchange reserves rising above US$11 billion.

Addressing an event, the SBP chief said sectors such as textiles, automobiles, cement and pharmaceuticals were showing positive growth as a result of policy actions taken by the central bank and government. He said the transformation from conventional to Islamic banking had also been initiated as part of broader financial reforms.

Ahmad credited the country’s import and export policies for playing a crucial role in stabilising the economy. “In March, inflation fell sharply to 0.7 per cent, and it has now dropped to a record low of 0.3 per cent,” he said. He expected inflation to remain between 5 to 7 per cent in the near term.

He acknowledged that Pakistan faced serious economic challenges three years ago, including a surge in inflation and widening external account deficits. However, efforts by the government and SBP, especially reforms in the food and energy sectors, had helped the economy to stabilise.

The SBP governor said the country’s trade balance, which showed a significant deficit in 2022, had turned into a surplus of US$1.9 billion. He noted that foreign exchange reserves had surpassed US$11 billion, aided by improved remittance inflows from overseas Pakistanis and repayment of a major portion of external debt over the past three years.

Jameel Ahmad said the positive effects of a more stable foreign exchange position would become more visible in the coming months.

Commenting on the significance of Islamic banking, he said its transition from the conventional system was a critical move. He appreciated the ongoing Islamic conference and called it timely and important. He also praised Saylani Welfare Trust for its social contributions, saying no service is greater than helping the country earn foreign exchange and strengthening the national economy.

Read next: Early gains wiped out as PSX nosedives over 700 points