SBP governor expects current account deficit below 1% of GDP

Pakistan's current account deficit is expected to remain between 0% and 1% of gross domestic product, State Bank of Pakistan Governor Jameel Ahmad said, pointing to improving economic fundamentals and external stability.

Addressing the annual convocation of the Institute of Cost and Management Accountants of Pakistan (ICMA Pakistan), the central bank governor said the economy had made significant progress since 2022 despite global and regional shocks. Real GDP growth recovered from a contraction in fiscal year 2023 to 3.7% in FY26, with further improvement expected in the fiscal year now under way.

Ahmad said inflation stayed close to the central bank's target range during FY26. Price pressures have increased since then, he said, but inflation is expected to ease gradually toward the medium-term target on the back of prudent monetary policy.

According to ProPakistani's account of the speech, Ahmad said raising the policy rate and holding it for almost a year, along with temporary measures to manage non-debt foreign exchange outflows, had been necessary to restore macroeconomic stability and avert a deeper external financing and debt crisis. A positive, forward-looking real policy rate helped bring inflation down from above 30% to within the medium-term target range, he said.

He said the gains were being recognised by international credit rating agencies, multilateral partners and foreign investors, and argued that lasting progress could not be achieved through short-term fixes at the expense of long-term stability.

On the financial sector, the governor said risk-based supervision had strengthened the early identification of financial stability risks, and that financial sector adequacy and performance indicators had improved despite a period of elevated policy rates.

ProPakistani reported that Ahmad told the graduating accountants: "When faced with such decision, let evidence guide your judgment, let professional ethics define your conduct, and let a long-term commitment to Pakistan's sustainable and inclusive development inform your action."

He urged the graduates to apply their training to the country's economic development, and underlined the accounting and finance profession's role in strengthening institutions, promoting accountability, supporting sound governance, the responsible use of public resources and productive investment.