SBP Chief calls global competitiveness key to ending boom-bust cycle

November 26, 2025 (MLN): Pakistan must shift from short-lived stabilization to an outward-looking, globally competitive growth model if it hopes to break its recurring boom-bust cycles, State Bank of Pakistan (SBP) Governor Jameel Ahmad said.

He urged businesses to modernize, integrate into global value chains, and abandon reliance on subsidies and protection.

Speaking at the Pakistan Business Council’s “Dialogue on the Economy,” Ahmad said Pakistan has historically swung between short spurts of growth followed by painful stabilization phases.

But the current cycle, he noted, is fundamentally different, backed by disciplined macroeconomic management and stronger fiscal-monetary coordination.

The governor said the central bank’s enhanced forecasting capacity, anchored in eight-quarter projections rather than short-term indicators, has helped avoid the premature policy easing that previously undermined stability.

“Inflation has not only fallen in line with our forecast but is expected to remain within the 5–7% target band over the medium term,” he said.

Ahmad stressed that Pakistan’s external buffers have strengthened in a “qualitatively different” manner compared with past cycles.

FX reserve buildup, he said, now reflects strategic foreign-exchange purchases and lower forward liabilities rather than debt-driven inflows.

Since 2022, Pakistan’s public sector external debt has remained broadly stable, while the external debt-to-GDP ratio has declined from 31% to 26%.

Over the same period, SBP’s FX reserves climbed from a critically low $2.9 billion to about $14.5 billion, nearly a fivefold increase.

The governor said sustainable growth requires anchoring policy in a long-term vision rather than relying on consumption-led spurts.

Pakistan’s repeated achievement of primary fiscal surpluses over the last three years has helped place public debt on a more sustainable footing, a rare outcome historically.

He pointed to ongoing structural reforms, including efforts to raise the tax-to-GDP ratio through documentation and base broadening, and energy-sector reforms aimed at lowering the cost of energy.

These, he said, are complemented by SBP initiatives to enhance financial intermediation and widen financial inclusion.

“Pakistan stands at an inflection point,” Ahmad said, adding that growth rates of 3–4% are no longer sufficient for a population exceeding 250 million.

He urged firms to position themselves for global competitiveness instead of relying on domestic protectionist policies.

He called on the private sector to:

• integrate into global value chains;

• modernize production;

• leverage growing opportunities with the U.S., China, and Middle Eastern economies;

• invest in innovation;

• diversify funding by tapping domestic and international capital markets;

• adopt advanced digital tools for financial operations;

• and document supply chains to improve productivity, access to finance, and resilience.

“Rapid digitalization, the green transition, and global supply-chain realignments offer windows of opportunity, if our firms are willing to adapt,” the governor said.

Concluding, Ahmad emphasized that the recent stability must serve as the foundation for long-term prosperity. “We cannot expect different results by doing more of the same,” he said. “Only by moving together, government, SBP and the private sector, can we secure a future of sustained and inclusive growth.”

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