Pakistan’s economy is gaining momentum and is expected to grow by around 4% in fiscal year 2027, driven largely by industrial expansion, State Bank of Pakistan (SBP) Governor Jameel Ahmad said on Friday.
Addressing a post-monetary policy press conference, he highlighted improved macroeconomic stability, stronger external accounts and record remittance inflows. According to Ahmad, economic activity had accelerated broadly in line with the central bank’s expectations, with Large-Scale Manufacturing posting average growth of 6% during FY26 and recording double-digit growth in some months.
He said the macroeconomic outcomes of the past fiscal year were broadly consistent with the central bank’s projections. Although inflation accelerated to 11.1% year-on-year in June due to higher petroleum prices, average inflation for FY26 stood at 7.04%, remaining close to the medium-term target range.
Ahmad said Pakistan’s external sector had improved significantly over the past four years. The current account deficit narrowed from $17.5 billion, or 4.7% of GDP, in FY22 to $3.3 billion in FY23 and $2.1 billion in FY24 before recording a surplus of $2.1 billion, equivalent to 0.5% of GDP, in FY25. The current account remained in surplus during the first 11 months of FY26 and was expected to finish the fiscal year within the SBP’s target range of a surplus between 0% and 1% of GDP, he added.
Foreign exchange reserves
The SBP governor said foreign exchange reserves rose to $18.4 billion at the end of FY26 from $13 billion a year earlier, easing foreign exchange constraints, supporting external debt repayments and reducing banks’ outstanding foreign exchange liabilities from $5.8 billion in FY23 to $950 million.
He noted that, excluding external debt repayments made during the year, reserves would have reached nearly $23 billion, reflecting the strength of Pakistan’s external inflows. Despite total external debt remaining broadly unchanged at around $100 billion since FY22, the country’s foreign exchange reserves have increased nearly six-fold from about $3 billion three years ago, substantially improving external resilience, he added.
He maintained the government’s external borrowing strategy has shifted away from short-term commercial financing toward long-term multilateral loans with maturities of 20-25 years, improving the overall debt maturity profile.
Remittances
The governor said workers’ remittances remained a key pillar of external stability, rising from $27.3 billion in FY23 to $38.3 billion in FY25. Preliminary estimates indicate remittances exceeded $41.5 billion in FY26, broadly in line with the SBP’s earlier projection of $41 billion to $42 billion. He said remittance inflows were expected to increase even further during FY27.
He confirmed that the government was discontinuing remittance incentive schemes. However, he added, participating banks would continue operating the schemes under the existing framework while bearing all associated marketing costs themselves, with overseas Pakistanis continuing to receive remittance services free of charge.
Ahmad said inflows under the Roshan Digital Account scheme had improved significantly, averaging around $300 million/month following recent enhancements to the program’s operating framework.