In the Governor’s Annual Report for 2022-23, SBP Governor Jameel Ahmed stated that political uncertainty had a significant impact on business and consumer sentiments, resulting in a 0.2 per cent contraction of real GDP in FY23. The report also noted that the budgetary targets for the government’s fiscal and primary balances were missed by large margins due to lower than planned tax revenues and reduction in subsidies.
The report highlighted the measures taken by the central bank to contain domestic demand and imports in response to growing pressures on the rupee and general prices. The average national Consumer Price Index inflation surged to 29.2 per cent in FY23, in line with the SBP’s revised inflation projection range of 27–29pc. Mr. Jameel stated that the central bank will continue to make decisions to prevent high inflation and achieve the medium-term inflation target of 5-7pc by the end of FY25, with FY24 inflation moderating to 20-22pc.
Additionally, the report emphasized the central bank’s responsibility of achieving and maintaining price stability, while also highlighting the role of fiscal policy and effective administration in ensuring price and financial stability.
The report also mentioned that this outlook is contingent upon the absence of adverse shocks stemming from geopolitical tensions, unforeseen climate events, and unfavourable movements in global commodity prices.