KARACHI: State Bank of Pakistan (SBP) Governor Jameel Ahmed on Tuesday highlighted the necessary but challenging policy and regulatory measures taken in recent years that have led to macroeconomic stability. He said the country’s economic growth is on the path to recovery and is expected to accelerate further in the current fiscal year.

Speaking at the 9th Annual Microfinance Conference, organised by the Pakistan Microfinance Network (PMN), the SBP governor noted that achieving inclusive economic growth requires enduring macroeconomic stability to uplift communities and secure prosperity for all. The conference, themed “Renaissance of Microfinance”, focused on the role of microfinance in driving inclusive development.

Mr Ahmed pointed to notable improvements in Pakistan’s macroeconomic indicators. Inflation, he said, has declined significantly and is expected to remain within the government’s target range of 5-7 per cent over the medium term, despite potential upward pressure from the recent floods. He also highlighted that the country’s foreign exchange reserves are now almost five times higher than they were in February 2023, thanks to strategic interbank foreign exchange purchases aimed at bolstering reserves. This, he noted, had averted the need for higher borrowing at elevated interest rates for timely debt repayments, improving the country’s debt dynamics.

Says tough measures have yielded stability

Despite temporary setbacks, particularly the losses to agriculture from recent floods, Ahmed said economic growth is expected to accelerate further in FY26. The SBP Governor also outlined several reforms aimed at enhancing the microfinance sector. These include revisions to the Prudential Regulations for Microfinance Banks, shifting from a rules-based to a principle-based approach. The changes remove restrictions on micro-enterprise lending, introduce a new Agriculture and Livestock loan category, and raise loan limits to Rs5 million for agriculture, micro-enterprise, and housing loans, with Rs500,000 available for general loans.

Additionally, the SBP has launched a Climate Risk Fund under the World Bank-funded Resilient and Accessible Microfinance Project. The fund aims to support two million borrowers through liquidity facilities to mitigate climate-related shocks. Furthermore, a Risk Coverage Scheme for small farmers and underserved areas has been introduced, offering 10pc first-loss coverage and operational incentives to expand lending in regions such as Balochistan, Khyber Pakhtunkhwa, Azad Jammu and Kashmir, and Gilgit-Baltistan.

Published in Dawn, October 15th, 2025