KARACHI: State Bank of Pakistan (SBP) Governor Jamil Ahmed admitted that the country’s exports were lower than expected and urged the business community to increase production and international trade activity.
He claimed that the country’s foreign commitments had remained unchanged for a long time, and attributed this stability to the current government’s wise economic and financial management.
Addressing industry leaders of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the State Bank of Pakistan Governor said, “External debt has not increased in the past two and a half years, while a loan worth $8 billion has been fully repaid in the short term.” Karachi on Thursday.
He pointed out that the country’s actual external debt amounted to more than 100.08 billion dollars, adding that its size had improved significantly, adding that the external debt had increased by 500 million dollars due to the revaluation of debts.
The central bank head said debt service and balance of payments improved as the country borrowed money mostly through multilateral institutions this year, and short-term debt was repaid through long-term debt.
The governor explained that controlling external accounts will pave the way for economic growth. Ahmed added, “Issues such as high interest rates have been addressed, and there are no longer any restrictions on imports.”
Last month, the central bank cut the key interest rate by 200 basis points to 13%, which is the fifth consecutive cut after the continued reduction in the inflation rate, which fell to 4.1% in December 2024.
The central bank head also stressed that the current account situation has stabilized, with remittances expected to reach nearly $3 billion in December. He expected that “the total transfers for the current fiscal year will reach at least $35 billion.”
The governor also noted that food inflation peaked at 47% in May 2023, adding that the inflation rate may rise during the period from April to June 2025.
Regarding foreign investment, the governor revealed that $2.2 billion would be allowed to be taken out of the country in 2024.
In addition, he announced that SMEs will benefit from a new financing facility, allowing companies to borrow up to Rs 10 million without collateral.
Ahmed said that the government will cover 20% of any losses resulting from these loans, and he also stressed that small export-based companies will receive priority in these credits.
During the event, the president of the Federation of Indian Chambers of Commerce, Industry and Commerce briefed the central bank governor on the ongoing issues with Iran and Afghanistan and urged immediate reduction of interest rates to 9% to support the economy.
Pakistan is navigating a challenging economic recovery path and was supported by a $7 billion facility from the International Monetary Fund in September 2024.
Although the country’s economy has been stable since it came close to defaulting last summer, it relies on bailouts from the International Monetary Fund and loans from friendly countries to service its huge debts, which swallow up half of its annual revenues.
Islamabad wrangled for months with International Monetary Fund officials for the latest loan, which came on the condition of reforms including raising household bills to treat a perpetually crisis-ridden energy sector and raising pathetic taxes.
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