Jameel Ahmed, the Governor of the State Bank of Pakistan (SBP), issued an inflation spike warning amid rising economic pressures. He has warned that the chances of inflation in Pakistan are still on the rise due to the budgetary measures issued by the government. Citing the inflation spike warning for the domestic sector, the SBP governor asserted that the external sector would remain stable due to the debt rollover of friendly countries. However, the internal sector will see some constraints in the coming months.
He addressed this information in a session of the National Assembly Standing Committee on Finance and Revenue on Wednesday, headed by MNA Naveed Qamar.
It is pertinent to mention here that the total outstanding debt for the fiscal year FY2025 stands at $26.2 billion. However, the good news for Pakistan is that the debt of $16 billion has already been rolled out by friendly countries, given the economic conditions. Therefore, the government has to pay the remaining amount of $10 billion by June 30, 2025. Citing these figures, the SBP governor said, “I don’t see any external pressures.”
However, the inflation in the domestic sector has been a cause for concern these days. It should be noted that inflation would stand at 11.5% in FY2025, but it could still rise further to 13.5% pertaining to the strict tax policies introduced in the energy sector and the budgetary measures as well. Moreover, due to the unrest in the Middle East, oil prices are also expected to continue to go up, which will ultimately increase energy prices in Pakistan as well. The SBP’s inflation spike warning comes as a reminder of the need for proactive measures to stabilize the economy.
The SBP Chief’s inflation spike warning has raised concerns. It should be noted that the interest rate in the country is also on the rise. In FY2024, the government spent Rs 8.3 trillion on interest payments, while in FY2025, it plans to spend Rs 9.75 trillion, higher than the previous year. Seeing these high interest rate figures, the committee members raised concerns, and the SBP governor stated that in order to keep inflation under control, high interest rates are mandatory.
