KARACHI: The State Bank of Pakistan (SBP) has revised its projections for workers’ remittances and foreign exchange reserves upward, reflecting improved inflows and a stronger external account outlook.
Addressing a press conference on the monetary policy decision, SBP Governor Jameel Ahmed said Pakistan’s external account position had improved significantly, adding that the country was now out of the danger zone.
He said that workers’ remittances have remained resilient in the first quarter of this fiscal year (FY27) and are projected to turn out higher than the earlier assessment. “Workers’ remittances are expected to increase further, with Pakistan’s inflows projected at USD 45 billion in the current fiscal year, up from the previous estimate of USD 44 billion,” he added.
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In addition, Exports are recovering, led by rice, HVA textiles and services exports and Pakistan’s exports are projected to range between USD 32.5 to USD 33 billion in FY27. At the same time, imports are also rising sharply, led by non-energy imports, in line with the recovery in economic activity and higher prices and the country’s import bill is expected to reach USD71 billion in FY27, he mentioned.
Based on these developments, Governor SBP said that the current account deficit in FY27 is assessed to remain within the earlier projected range of 0-1 percent of GDP.
He informed that SBP’s foreign exchange reserves had declined to USD 2.8 billion a few years back and now reached the USD 21.5 billion mark, which is sufficient to cover approximately three months of imports, meeting the international benchmark. He expressed confidence that the reserves would continue to strengthen and said the SBP would maintain the momentum in foreign exchange accumulation.
Jameel Ahmed said that along with higher financial inflows and a controlled current account deficit, SBP’s FX reserves are expected to increase beyond the current level. He said that as per projections SBP’s foreign exchange reserves would surge to USD 23 billion by the end of December 2026 and USD 25 billion by June 2027, adding that the reserve target had been set after accounting for external debt repayments and financing requirements for the current account deficit.
“This outlook, however, remains susceptible to multiple risks, including elevated global commodity prices, tightening international financial conditions, and supply constraints,” he warned.
He said a market-based exchange rate was important for strengthening foreign exchange reserves, alongside the increase in workers’ remittances.
Governor SBP said that Pakistan’s economy achieved an average of 4.2 percent growth during the first three quarters of FY26 but slowed in the final quarter amid global conflicts, dragging down the overall growth rate to 3.7 percent.
Although first-quarter GDP data for the current fiscal year is not yet available, he said the economy appears to have gained momentum and improved significantly. Therefore, the SBP has maintained its GDP growth projection at 3.5 to 4.5 percent for FY27, he added.
The Governor SBP said Pakistan’s external debt profile had improved significantly, with borrowing costs declining and the overall external debt position remaining broadly stable.
He said the SBP had purchased around USD 30 billion from the foreign exchange market over the past three years to strengthen its reserves, while a significant portion of these funds had been used to meet external debt repayments and other external financing requirements.
He said the improved external position had also strengthened confidence in Pakistan’s banking system. Previously, letters of credit (LCs) required confirmation at costs of 10 to 12 percent, whereas such confirmation was no longer necessary under the prevailing conditions.
He rejected the perception that high interest rates were the main reason for the lack of growth in exports, saying exporters faced a range of short-term and long-term challenges including higher cost of doing business, demand and global competition.
However, the SBP and government are taking several initiatives to boost exports, including performance-based financial incentives.
The Governor SBP said Pakistan’s rising remittances could not be attributed solely to an increase in the number of workers going abroad. He pointed out that overseas worker migration had peaked at around 900,000 people in 2015, while the number had declined to approximately 840,000 annually over the last two years. Despite this declining trend, inflows of remittances continued to rise.
He attributed the increase in remittances to several factors, including an improved exchange rate, reduced under-invoicing, stronger border controls and reforms introduced for exchange companies.
He said that recently the Pakistan Bank Association (PBA) announced a prize scheme worth Rs16 billion to encourage higher remittances. The first prize draw under the scheme is scheduled for January 2027.
Regarding the introduction of new currency notes, Jameel Ahmed said the designs would be finalized soon and the SBP had already made arrangements for their printing.
Copyright Business Recorder, 2026