The State Bank of Pakistan marked Independence Day with familiar reassurances. The governor spoke of price stability, record remittances, a current account surplus, and foreign exchange reserves nearly tripling over two years. These numbers, impressive at first glance, form the core of the central bank’s narrative that the economy has turned a corner. Yet, even as these achievements are highlighted, the governor himself acknowledges the need for structural reforms; an admission that stability, as defined by official indicators, is not translating into wider economic revival.
It is important to recognise the fact that all central banks in today’s integrated financial system effectively carry a dual mandate: price stability and growth. Pakistan’s central bank has devoted its energies to the first, and inflation has undeniably come down from a peak of 38 percent in May 2023 to 3.2 percent by June 2025. But the second mandate, fostering growth, has been left unfulfilled. The cost of achieving stability has been depressed activity, stalled investment, and little relief for households and businesses.
This is the paradox facing the economy. Inflation is reported in single digits, yet the ordinary citizen feels little difference compared to the years of record inflation. Food, fuel and basic services remain unaffordable for many, employment opportunities remain scarce, and small enterprises continue to struggle under weak demand. Statistical stability has not become tangible stability. If monetary policy has tamed headline inflation, it has not restored purchasing power or improved livelihoods.
Nor is the external position as robust as it appears. The governor points to reserves rising to $14.5 billion and a current account surplus for the first time in 14 years. These outcomes owe much to remittances, which reached $38.3 billion, and to compressed imports. But exports have not expanded to match the rhetoric of resilience. The share of remittances and borrowed flows in reserves means Pakistan remains vulnerable to shifts in global labour markets, capital sentiment, or geopolitical alignments. Without competitive export growth, the foundation of the external account is narrow and uncertain.
The recognition by rating agencies and the optics of stronger reserves are welcome, but they cannot substitute for investment, productivity and jobs at home. To rely on remittances and one-off external inflows as markers of resilience is to overlook the structural deficit in value-added exports, industrial modernisation and energy reform. These are the areas where reforms are overdue and where the governor himself stresses more needs to be done.
The lesson is clear. Monetary tightening can achieve containment of inflation, and administrative measures can lift reserves for a time, but only comprehensive reforms can put the economy on a sustainable path. Fiscal consolidation, better governance of public enterprises, energy sector restructuring and export competitiveness remain compelling tasks. Until progress is visible on these fronts, any talk of resilience will remain incomplete.
The State Bank deserves credit for restoring a measure of stability in an economy that had veered dangerously off course. But stability without growth is not enough. Unless the structural weaknesses that keep citizens from feeling the benefit of lower inflation and higher reserves are addressed, the promise of resilience will ring hollow. The focus must now shift from celebrating temporary relief to delivering the reforms that can secure durable growth.
Copyright Business Recorder, 2025
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