Economy regains stability as Q1 growth hits 3.7%, FY26 seen at up to 4.75%, SBP governor says

State Bank of Pakistan Governor Jameel Ahmad on Thursday called for scaling up Zarkheze, the central bank’s digital agricultural lending platform, to expand borrower outreach and strengthen inclusive agricultural finance.

The remarks came during a meeting of the Agricultural Credit Advisory Committee (ACAC) held in Karachi to review agricultural credit performance and discuss measures to strengthen inclusive and resilient agricultural finance.

Addressing participants, the governor said Pakistan’s economy has regained macroeconomic stability and is moving toward durable growth. Real GDP growth reached 3.7 percent in Q1-FY26, while full-year growth is projected between 3.75 and 4.75 percent. Headline inflation moderated to 5.8 percent by January 2026, allowing monetary policy to support growth while maintaining price stability. He added that the external account remains broadly contained due to prudent policies, resilient remittances and stable commodity prices.

He described agriculture as critical for improving farm productivity, supporting rural livelihoods and ensuring food security, and stressed the need to strengthen financial intermediation to promote value addition, market linkages and sustainable growth.

During FY25, agricultural credit disbursement reached a record Rs2,577 billion, marking a 16 percent annual increase. In the first half of FY26, disbursements stood at Rs1,412 billion, while the number of borrowers rose to 2.97 million.

To accelerate borrower expansion, particularly among small farmers in underserved areas, the governor urged banks to fully leverage SBP initiatives, including the Risk Coverage Scheme for Small Farmers and Underserved Areas and Zarkheze. The platform enables digital onboarding of farmers, standardised credit assessment, integration with land and crop data, and end-to-end traceability of loans, while ensuring financing is used for quality inputs through an integrated vendor network.

He emphasised that Zarkheze should become a core delivery channel for agricultural finance to make small-ticket lending commercially viable and expand outreach beyond traditional high-volume regions. Banks were asked to ensure timely application processing, strengthen internal ownership of the scheme and further develop the vendor ecosystem to improve farmers’ access to certified inputs and advisory services.

The governor also called for full implementation of banks’ Agricultural Credit Expansion Plans for FY26 and highlighted the importance of coordination with provincial governments for digitisation of land records and partnerships with fintechs, agri-tech firms and microfinance institutions.

The committee reviewed development of an upgraded crop loan insurance framework, CLIS+, being formulated under the ADB-funded Pakistan Insurance Transformation Programme. The proposed scheme aims to expand crop coverage, establish an insurance consortium for improved risk sharing and payouts, introduce technology-based calamity assessment and provide loss-of-income support. ADB’s Solidarity Fund will support extending coverage to non-borrowing farmers and development of a National Insurance Policy for Agriculture.

Members also discussed scaling up Electronic Warehouse Receipt Financing to improve post-harvest liquidity, reduce distress sales and strengthen market linkages. The committee noted the need to expand accredited warehousing infrastructure and enhance bank participation in warehouse receipt-based financing.

The governor outlined three priorities for the banking sector: expanding borrower outreach through microfinance banks and small-ticket products; strengthening financing for subsistence and small farmers; and extending agricultural finance to underserved areas. He concluded by urging banks to expand the agricultural borrower base, strengthen small farmer inclusion and scale up digital delivery channels such as Zarkheze to support sustainable agricultural growth.