Karachi: Pakistan’s economy showed signs of stabilisation in the recently concluded fiscal year, with inflation easing to its lowest level in nearly a decade and remittance inflows reaching a record high, according to the State Bank of Pakistan (SBP).
Speaking at the Reuters NEXT Asia summit in Singapore, SBP Governor Jameel Ahmad noted that inflation had declined significantly following a year of tight monetary policy. The central bank had maintained a restrictive stance, with interest rates peaking at 22 percent before gradually reducing them to 11 percent.
As a result, inflation — which reached 38 percent in May 2023 — fell to 3.2 percent in June 2025. The average inflation rate for the 2024–25 fiscal year stood at 4.5 percent, marking a nine-year low.
“This is a clear reflection of the monetary policy transmission working effectively,” Ahmad said during a panel discussion that also featured Sri Lanka’s central bank governor.
On the external front, Pakistan received USD 38.3 billion in remittances during FY25, reflecting a 26.6 percent increase from the previous year. In June alone, inflows totaled USD 3.4 billion, up from USD 3.1 billion in June 2024. The monthly average remittances stood at USD 3.19 billion, compared to USD 2.52 billion in FY24.
The SBP attributed the growth to improved exchange rate stability, the formalisation of digital remittance channels, better regulatory measures, and increased inflows during festive periods.
Foreign exchange reserves also strengthened, climbing to USD 14.51 billion — nearly five times the levels seen two years ago. Meanwhile, exports rose by 4.67 percent to USD 32.1 billion, according to data from the Pakistan Bureau of Statistics.
IMF Programme Remains on Track
Governor Ahmad also confirmed that the country’s USD 7 billion Extended Fund Facility (EFF) agreement with the International Monetary Fund (IMF), which runs through September 2027, is progressing as scheduled. The programme has prompted reforms in fiscal policy, energy pricing, and the foreign exchange regime.
“We are confident that after this programme, we may not require an immediate follow-up,” Ahmad said, indicating optimism about Pakistan’s economic trajectory post-programme.
He also addressed concerns about foreign debt exposure, noting that only 13 percent of it comprises Eurobonds and commercial loans. “The rest is largely dollar-denominated and not vulnerable to fluctuations in the euro or other currencies,” he added.
Ethical Financing Deal Secured
Separately, the Ministry of Finance announced that Dubai Islamic Bank had arranged a USD 1 billion syndicated term-finance facility for Pakistan. The five-year, Shariah-compliant facility was secured through a consortium of international investors and is expected to support Pakistan’s reform agenda.
Finance Minister Muhammad Aurangzeb described the arrangement as a “significant step” toward broadening the country’s financial base. “It also reinforces our commitment to innovative and ethical funding solutions in line with Islamic finance principles,” he said.
The developments come as Pakistan continues efforts to stabilise its economy, attract investment, and strengthen regulatory oversight — particularly in emerging sectors such as digital payments and virtual assets.
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