SBP governor forecasts GDP growth of 2.5-3.5%
Forecasting a strong current account surplus this year, Finance Minister Mohammad Aurangzeb on Monday ruled out any desperate measures risking undue external pressure, safeguarding hard-earned economic gains.
“Three years ago, the government pressed the growth accelerator, straining the balance of payments,” Aurangzeb remarked during a meeting of the Senate Standing Committee on Finance, Revenue, and Economic Affairs, held under the chair of Senator Saleem Mandviwalla on Monday.
“But no matter how much pressure there is now, we will not repeat that mistake.” Addressing liquidity concerns, he clarified there had been no complaints about letters of credit not being opened in the last 10 months.
“No foreign company has been stopped from sending profits abroad, which shows there’s no pressure on the currency,” the finance czar added.
He also highlighted foreign interest in Pakistan’s economy, mentioning investment commitments from Saudi Aramco, Chinese firm Norinco, and electric auto giant BYD.
“We are finally implementing the reforms proposed by Dr Ishrat Husain in 2019 to strengthen institutions and improve governance,” the finance minister noted. With challenges like inflation and external vulnerabilities still looming, Aurangzeb expressed confidence in the government’s ability to handle economic headwinds. “Economy is on the right track,” the finance minister said adding, “Our commitment to reforms and prudent management will steer us toward stability and growth.”
State Bank of Pakistan Governor Jameel Ahmed echoed the finance minister’s optimism, forecasting GDP growth of 2.5-3.5% for the ongoing fiscal year.
“Exports are up by 10-12%, and we expect remittances to reach $35 billion this year,” he said.
Jameel Ahmed, however, acknowledged a temporary dip in overseas workers’ remittances, which he attributed to a crackdown on currency smuggling and irregular exchange companies.
“These measures will ultimately lead to more formal inflows and stabilise the market,” he added. The governor also highlighted the foreign exchange reserves position. “Reserves have reached $11.7 billion, enough to cover 2.5 months of imports and are entirely owned by the government,” he asserted.
The governor informed the meeting that global oil prices had fallen to $70-75 per barrel. “Imports decreased in November, and the petroleum division has deferred LNG procurement,” he added.
