Karachi: The State Bank of Pakistan (SBP) has said it will prioritise economic stability and avoid bold or unconventional policy rate cuts, despite the prime minister’s call for aggressive monetary easing. SBP Governor Jameel Ahmad stated that Pakistan has passed the most critical phase of its economic crisis and has now entered a stable period, with improving external balances, controlled inflation, and recovering foreign exchange reserves. He expects this stability to continue for at least the next two years.
The central bank has completed the first stages of its recovery plan and will now support development finance initiatives aimed at promoting sustainable growth and strengthening productive sectors. Ahmad stressed that caution remains key, warning that aggressive rate cuts could destabilise inflation and undo hard-earned macroeconomic gains.
Key indicators show steady progress. The current account deficit, which peaked at 4.7% of GDP in 2022, turned into a surplus in 2025, mainly due to strong remittance inflows, and is expected to remain within 0%–1% of GDP. Inflation has stabilised between 5% and 7%, creating a more predictable economic environment, while foreign exchange reserves have improved despite moderate increases in imports, which have risen to about $6 billion monthly. Exports are mixed: non-food exports are growing at 5%–6%, but rice exports fell 47% during July–December FY2026.
To support exporters and industry, the government has introduced measures such as reduced electricity tariffs, adjustments to the Export Finance Scheme, and “Blue Passports” for top exporters to facilitate international trade. On the country’s dependence on the IMF, Ahmad said the future will depend on Pakistan’s fiscal discipline, noting that the ongoing USD 7 billion Extended Fund Facility (EFF) is expected to conclude by late 2027. He also clarified that lower policy rates do not automatically save the government money on interest payments, as they reduce SBP’s earnings from monetary operations. Last year, the SBP transferred PKR2.4 trillion to the government, which is expected to drop to around Rs2 trillion this year due to lower interest rates.
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