External account has strengthened despite global uncertainty: SBP

KARACHI: State Bank of Pakistan (SBP) Governor Jameel Ahmad said on Friday that the country’s external sector had improved markedly over the past three years, with foreign exchange reserves rising from $3 billion to $17 billion and remittances expected to surpass $41 billion in the current fiscal year.

Speaking at an interactive session during his visit to the Karachi Chamber of Commerce and Industry (KCCI), Ahmad said the economic environment had changed significantly from the conditions seen in 2023, when imports had fallen sharply and businesses were facing difficulties in opening Letters of Credit (LCs).

"Average monthly imports have now crossed $5 billion compared to nearly $3 billion three years ago, while the LC situation has improved substantially," he said.

The SBP governor said reforms introduced by the central bank, along with strict action against Hundi and Hawala, had contributed to stabilising the economy and reinforcing the country’s foreign exchange position. He said remittances, which stood at $38 billion in the last fiscal year, were projected to exceed $41 billion this year.

Ahmad said Pakistan’s current account remained in surplus during the first nine months of FY26, while the overall deficit was expected to stay between zero and 1%.

"Pakistan's external account is now in a much stronger and healthier position," he remarked.

Growth, inflation and currency notes

On the broader economy, Ahmad said the Pakistan Bureau of Statistics had estimated gross domestic product growth at 3.7% in the first nine months of the current fiscal year. He added that the SBP was projecting full-year growth in the range of 3.75% to 4.75%, though he cautioned that global uncertainty and oil prices could affect performance in the final quarter.

He also said inflation could move above 7% in the last quarter of FY26 on a temporary basis, but added that the central bank remained focused on keeping inflation within its medium-term target band of 5-7%. He expressed the view that inflation would ease gradually over time.

In another disclosure, the governor said the designs for new currency notes had been completed and forwarded to the federal cabinet for approval. He also clarified that exchange company rates were set by market forces and that the SBP did not directly determine exchange rates.

Ahmad further said work was in progress on a licensing and regulatory framework for virtual assets in Pakistan.

SMEs and exports

Highlighting the central bank’s focus on small and medium enterprises, Ahmad said regulations had been simplified, procedural barriers reduced and banks instructed to prepare dedicated SME growth plans. He said SME financing had increased from Rs491 billion in June 2024 to Rs882 billion by December 2025, with a target of reaching Rs1.5 trillion by June 2028.

"Pakistan's future GDP growth is directly linked with SME expansion," he said, adding that the SBP had also introduced a simplified one-page loan application form for SMEs.

On exports, the governor said international economic conditions and lower global commodity prices had weighed on performance. He said rice exports of $3.5 billion had provided major support to exports last year, but a decline in global rice prices had reduced export earnings by nearly $1 billion this year.

According to Ahmad, exports were expected to come in at around $30 billion this year, compared with $32 billion last year. He said the government was pursuing steps to improve the situation and that positive results were expected within the next two months.