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ISLAMABAD, Nov 26 (APP):Governor State Bank of Pakistan (SBP) Jameel Ahmad on Wednesday called upon the local trade and businesses to invest in people to attain sustainable and long-term inclusive economic growth and social prosperity across the country.
Addressing a two-day event titled ” Dialogue on the Economy”, organized by the Pakistan Business Council (PBC), the governor said that economic growth is impossible without an adaptable and skilled workforce, especially at a time when Pakistan’s young population offers a demographic dividend that gives us an edge over many other countries.
Our firms must invest in upskilling their employees in digital literacy, technical expertise and managerial capabilities, aligning them with staging market needs, he said adding that the private sector should also pursue partnerships and joint ventures abroad to facilitate technology transfer, knowledge sharing and improving productivity and competitiveness.
He asked the businesses, chambers of commerce and trade associations to collaborate, adding that by co-investing in vocational training, innovation hubs, and supply chain linkages, the businesses can achieve collective productivity gains.
The SBP Governor also asked for exploring beyond traditional bank financing and make greater use of domestic and global capital markets to meet the growing financing needs, adding that by tapping equity and debt markets, both at home and abroad, businesses can diversify their funding sources, raise longer-term capital and reduce their reliance on the domestic banking system, he remarked.
He said that the monetary policy has become more forward-looking over the last few years, adding that since monetary policy operates with long lags, by adopting a forward-looking approach we allow transmission to work more effectively.
The Monetary Policy Committee now regularly reviews projections for the next eight quarters rather than focusing only on current data and near-term projections, he said adding that this shift reflects both enhanced analytical capacity and greater confidence in the in-house forecasting models.
He informed that two years ago, the SBP had projected inflation to fall back within the target range of five to seven percent in the periods ahead, adding that there was widespread skepticism. Not only has inflation declined as per our projection, but it is expected to remain within the target band over the medium term.
Similarly, more recently, our early assessments of a pickup in economic activity from January 2025 onwards were questioned, yet this momentum is now evident in official data and national accounts, he added.
Jameel Ahmad said that the buildup of the external buffers has been driven by sustained foreign exchange purchases rather than the debt-heavy or short-term inflows that previously supported the gross foreign exchange reserves.
He said that between 2015 and June 2022, external public-sector debt rose from $55 billion to around $100 billion, an average increase of about $6.4 billion per year, adding that despite this additional borrowing, the SBP’s FX reserves declined over that period.
In contrast, he said that since June 2022, public-sector external debt has remained broadly unchanged in absolute terms still around $100 billion resulting in a substantial decline in the external debt-to-GDP ratio from 31 percent to 26 percent by June 2025, he added.
At the same time, we have rebuilt our FX buffers from the critically low level of $2.9 billion in February 2023 to around $14.5 billion dollars a nearly five-fold increase.
Moreover, we have also reduced the SBP’s forward liabilities to below $2 billion, down from a peak of $5.7 billion dollars in February 2023, he added.
He said that this time the buildup in FX reserves reflects not only a significant quantitative improvement but also meaningful qualitative strengthening of our external position.
Jameel Ahmad said that despite challenges and skepticism, the government has achieved the ambitious path of necessary fiscal consolidation over the past three consecutive years, adding that even surpassing its primary surplus targets.
This is something we have rarely witnessed in the past and as a result, our debt indicators have improved and become more sustainable, he said adding that after rising by an average of 2.3 percentage points per year from June 2016 to June 2022, the public debt-to-GDP ratio has since declined by an average of one percentage point every year.
He informed that there was a growing recognition that sustainable growth will remain elusive until policy-making is reoriented towards a long-term vision of achieving socioeconomic prosperity for our people instead of looking for short-term consumption-driven growth spurts at a high cost.
The Governor said that this shift is reflected in the long-term reforms initiated by the government and the SBP under the home-grown policy framework.
He said that the government is now focusing on increasing the tax-to-GDP ratio through increased documentation of the economy and widening the tax base, besides the energy-sector reforms are also underway to reduce the cost of energy.
Speaking on the occasion, Chairman PBC Dr Zeelaf Munir said that Pakistan must move from stabilization to long term prosperity driven by competitive private sector growth. He emphasizes partnership across government, business, academia and civil society.
He called for predictable rules, fair regulation and policy consistency to restore investor confidence and highlights that PBC members contribute significantly to GDP, employment, exports and the tax base. He urged the government to introduce reforms that support compliance, formalization and opportunities for SMEs.