Governor of the State Bank of Pakistan (SBP) Jameel Ahmad announced that Pakistan’s economic growth will surpass 3% in the current fiscal year, with projections indicating further acceleration in the coming year.

Speaking at a press conference on Thursday, the central bank head stressed the importance of maintaining stable and gradual growth to avoid future balance of payments issues.

He noted that while Pakistan’s economic growth has averaged 3.5% over the last decade, the country occasionally experiences significant leaps in growth, followed by challenges in the subsequent years.

"The path to stable growth lies in gradual and consistent development," he said, highlighting that the SBP would focus on managing inflation and external account challenges.

SBP governor also revealed the SBP's inflation target for the current fiscal year, set at 5 to 7 percent. He expressed optimism that if economic indicators improve and inflation remains under control, other sectors would also benefit.

"We hope that Pakistan’s current account will remain in surplus through December," he added.

Foreign debt stabilisation and remittances

The governor also provided an update on Pakistan’s foreign debt, which remains at a manageable level. As of now, the country's actual foreign debt stands at $100.8 billion.

This figure has increased slightly by $500 million due to debt revaluation, but Ahmad reassured that the overall debt situation has significantly improved since 2022.

In terms of foreign exchange inflows, Mr Jameel stated that remittances have been stabilizing and are expected to total $35 billion by the end of this fiscal year. Exports are also showing signs of improvement, though he called for more efforts to increase export volumes, which are essential for reducing reliance on remittances.

Focus on export growth and SMEs

"Achieving sustainable economic growth will depend on increasing exports and reducing dependency on remittances," Jameel Ahmad emphasised.

The SBP governor also underscored that foreign exchange reserves are being effectively utilized to meet the demand of foreign investors and companies. In 2023, Pakistan provided $330 million to foreign investors for dividends and profits, and in 2024, this figure rose to $2.2 billion.

He further highlighted the government’s strong focus on boosting the Small and Medium Enterprises (SMEs) sector, which he believes will play a crucial role in economic expansion. Under the new policies, SMEs can now secure loans up to Rs 10 million without the need for collateral.

The government has also raised the loan target for SMEs from Rs 543 billion to Rs 1,100 billion, with banks instructed to increase SME lending by Rs 100 billion annually.