State Bank of Pakistan Governor Jameel Ahmed has expressed confidence that Pakistan’s economy is better positioned to manage risks stemming from tensions in the Middle East, including the ongoing conflict involving Iran, due to strengthened economic fundamentals.
He highlighted that key macroeconomic indicators have outperformed expectations since the start of the current fiscal year. This progress is attributed to a balanced approach combining monetary and fiscal policies, which has helped control inflation and bolster the country’s external financial standing.
In a significant development, Ahmed engaged with senior officials from major international financial institutions, global banks, and credit rating agencies during the IMF-World Bank Spring Meetings held in Washington from April 13 to 18. He acknowledged that the Middle East crisis has introduced new uncertainties but emphasized that Pakistan’s economy is now more resilient compared to previous crises.
Prior to the recent geopolitical tensions, Pakistan had already made considerable strides in stabilizing its economy. Inflation was maintained within target ranges, fiscal and external buffers were strengthened, and the current account remained in surplus. Ahmed noted that inflation averaged 5.7 percent over the first nine months of the fiscal year, while foreign exchange reserves rose to $16.4 billion, largely due to the SBP’s market interventions. He anticipates reserves will further increase to approximately $18 billion by June 2026, supported by ongoing inflows and bilateral financing agreements.
The governor also pointed out that this improved economic stability has contributed to a steady recovery in growth, with real GDP expanding by 3.8 percent in the first half of FY26, compared to 1.8 percent during the same period last year. He stressed that Pakistan is now better equipped to absorb external shocks, such as those experienced during the global disruptions caused by the Russia-Ukraine conflict in 2022.
Despite potential challenges from rising global energy prices, shipping expenses, and insurance costs linked to the Middle East situation, Ahmed maintained that Pakistan’s stronger economic foundation provides a significant buffer. He reaffirmed the commitment of both the SBP and the government to uphold price stability and assured that necessary measures would be taken if required. Monetary policy remains cautious, with interest rates kept sufficiently high in real terms.
On the fiscal front, the government has achieved primary budget surpluses and implemented targeted subsidies alongside austerity measures to manage demand amid current pressures. Ahmed also highlighted Pakistan’s recent staff-level agreement with the IMF under ongoing programs and a positive credit rating review as indicators of growing confidence in the country’s reform agenda.
During his visit, the SBP governor met with members of the Pakistani diaspora and promoted initiatives such as the Roshan Digital Account (RDA). He revealed that RDA inflows have surpassed $12.4 billion across more than 917,000 accounts. Recent regulatory amendments now permit non-resident entities to participate, aiming to attract wider foreign investment and enhance Pakistan’s integration with global financial markets.
