- Ahmed says the country’s actual external debt stands at over $100.08 billion.
- “Controlling external accounts to pave the way for economic growth.”
- The SBP governor expects remittances to exceed $35 billion this year.
KARACHI: State Bank of Pakistan (SBP) Governor Jameel Ahmad has asserted that the country’s external liabilities have remained unchanged for a prolonged period, attributing this stability to the prudent economic and fiscal management of the incumbent government.
“External debt has not increased in the last two and a half years, while a loan of $8 billion was fully repaid in the short term,” Governor SBP said while addressing state leaders. industry at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in Karachi.
He pointed out that the country’s actual external debt amounts to more than 100.08 billion dollars, adding that its volume has improved significantly, adding that the external debt increased by 500 million dollars due to the revaluation debt.
He said debt service and balance of payments had improved as the country had borrowed money this year mainly through multilateral institutions and short-term debt was being paid by debt. in the long term.
The governor said external audit would pave the way for economic growth. “Issues such as high interest rates are resolved and there are no more restrictions on imports,” Ahmad added.
Last month, the central bank cut its policy rate by 200 basis points (bps) to 13%, marking its fifth consecutive cut after a continued reduction in the inflation rate which fell to 4.1% in December 2024.
The central bank chief also highlighted that the current account situation has stabilized, with remittances expected to reach almost $3 billion in December. “Remittances for the current fiscal year are expected to total at least $35 billion,” he forecasts.
The governor further noted that food inflation peaked at 47% in May 2023, adding that the inflation rate could increase between April and June 2025.
He, however, admitted that exports were lower than expected, urging the business community to step up production and international trade activities.
Regarding external investments, the governor revealed that $2.2 billion could be withdrawn from the country in 2024.
Additionally, he announced that small and medium enterprises (SMEs) would benefit from a new financing facility, allowing businesses to borrow up to Rs 10 million without collateral.
Stating that the government would cover 20% of any losses on these loans, Ahmad also confirmed that small exporting businesses would be prioritized for these credits.
During the event, the FPCCI president briefed the central bank governor on ongoing trade issues with Iran and Afghanistan, urging an immediate reduction in interest rates to 9% to support the ‘economy.
Pakistan is on a difficult economic recovery path and has been supported by a $7 billion facility from the International Monetary Fund (IMF) in September 2024.
Although the country’s economy has stabilized since nearly defaulting last summer, it relies on IMF bailouts and loans from friendly countries to service its enormous debt, which swallows up half of its annual income.
Islamabad argued for months with IMF officials to release the latest loan, which was contingent on reforms including an increase in household bills to address an energy sector in perennial crisis and an increase in pitiful tax revenues.