The governor of the State Bank of Pakistan (SBP), Jameel Ahmed, announced that, over the past two years, Pakistan successfully repaid $ 2 billion in loans, a clear indication of positive strides in managing the foreign debt of the country. During a talk show on television, the Ahmeds emphasized the improved foreign exchange reserves and forecasted a surplus of $700 million in the current account for November 2024.
“The foreign exchange reserves did go up, and we are speaking now of a surplus in the current account amounting to $ 700 million for the month of November,” said Ahmed, stressing the steady recovery of the country from the global recession. He further assured that remittances from the overseas Pakistani workforce would exceed $35 billion before the end of the current fiscal year. This foreign currency inflow is essential in keeping the economy afloat for a country like Pakistan.
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Ahmed’s comments came in the wake of the announcement of the SBP Monetary Policy Committee’s (MPC) decision to reduce its policy interest rate by 200 basis points, with effect from December 17, 2024, thus taking the rate to 13%. The move will act as a measure to encourage economic growth at the same time as controlling inflation. SBP said November 2024 recorded an inflation rate of 4.9% mainly because of decreased food inflation and softening gas tariff hikes at the end of 2023. However, the core would still be high at 9.7%. Therefore, it would be a challenge. It is further noted by the central bank that inflation expectations among consumers and businesses remain volatile. This makes it more complex to stabilize the economy.
The optimism that Ahmed manifests towards the very good economic fundamentals of Pakistan, such as foreign reserves, loan repayments, and remittances, has been crucial to the road to economic stability and growth in spite of inflationary pressures. Next comes the importance of his statement as he makes it when the country sails through the complicated map of fiscal reforms, along with certain external financial commitments. Although well-augmented with foreign exchange reserves and by their loan repayments, all aimed at reducing inflation through reducing the policy rate, Pakistan is likely to remain on an economic positive track in the months ahead.