SBP governor assures global investors of meeting IMF targets

State Bank of Pakistan (SBP) Governor Jameel Ahmad on Friday informed global investors that Pakistan was “on track" to address the longstanding structural weaknesses, adding that the country is "very comfortably" placed to meet the targets set by the International Monetary Fund (IMF) under the loan agreement.

As per a State Bank press release, the central bank governor made the assurance during his meeting with key international investors during events organised by global banks — including Barclays, JP Morgan, Standard Bank, and Jefferies — on the sidelines of the IMF-World Bank meetings in Marrakech Morocco.

The governor briefed the investors about the recent macroeconomic developments, policy responses to current challenges, and the outlook of Pakistan’s economy, and addressed their questions.

The governor informed the investors that the “current policy mix is geared” to achieve stabilisation by addressing the “macroeconomic imbalances”. He stated that the SBP was among the first central banks that began to tighten monetary policy in the wake of the rising inflation globally. However, certain domestic challenges such as the 2022 floods had “complicated" SBP’s efforts to bring down inflation.

“Stabilisation measures have started yielding results. Inflation has come down to 31.4% in September 2023 after peaking at 38.0% in May 2023 and is expected to continue its downward trajectory over the coming months, whereas the external account has improved considerably and foreign exchange buffers are being built up,” the governor was quoted. He added that the central bank expects inflation to “come down significantly during the second half of this fiscal year”.

“Going forward, the stand-by arrangement with the IMF is expected to support the ongoing policy efforts to stabilise the economy,” said the governor. He stated that the “foreign exchange buffers are improving with both build-up in reserves and reduction in forward foreign exchange liabilities”.

He explained that since January 2023, SBP’s foreign exchange reserves improved from a low of $3.1 billion to $7.6 billion as of end-September 2023. The reserve build-up was largely supported by non-debt-creating inflows amid favourable market conditions.

“At the same time, SBP’s forward foreign exchange liabilities have declined and the forward book target of $4.2 billion for end-September 2023 agreed with the IMF has already been met by a wide margin. Similarly, SBP is also very comfortably placed to meet the other end-September IMF targets, including Net International Reserves (NIR) and Net Domestic Assets (NDA),” said the governor.