Pakistan raises key policy rate by 100bps

Pakistan’s central bank on Saturday increased the key policy rate by 100 basis points (bps), bringing it up to 8.5 percent and making the decision effective from the beginning of the next month. (REUTERS/photo)
Updated 29 September 2018
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Pakistan raises key policy rate by 100bps

  • The State Bank of Pakistan believes the real GDP growth for FY19 will be around 5 percent
  • Despite some growth in workers’ remittances, the current account deficit stands at $2.7 billion

KARACHI: Pakistan’s central bank on Saturday increased the key policy rate by 100 basis points (bps), bringing it up to 8.5 percent and making the decision effective from the beginning of the next month. The bank cited inflationary pressure in the economy, along with expanding external deficit and vulnerability to external shocks as key reasons for its decision.

“This assessment takes stock of the factors including higher-than-anticipated increase in international oil prices, an upward revision in domestic gas prices, further increase in regulatory duties on imports, and the continuing second-round impact of previous exchange-rate depreciations,” the State Bank of Pakistan (SBP) said in its statement.
The central bank maintained that the average headline inflation was expected to fall in the revised forecast range of 6.5 to 7.5 percent for the current fiscal year, FY19. “Inflation is inching up, particularly from March 2018 onwards. So far, in the first two months of FY19, headline CPI inflation has averaged 5.8 percent, as compared to 3.2 percent for the corresponding months of FY18, and an average of 3.9 for all of FY18. The jump is even more pronounced in core inflation -- a key measure reflecting the underlying inflationary pressures in the economy,” the SBP said.
The Asian Development Bank, in its recently released report, had also raised the inflation forecast to 6.5 percent in FY19 because of the currency depreciation and elevated international oil prices.
The SBP added: “Following a healthy growth of 5.8 percent in FY18, economic activity is likely to slow down in FY19 as the general macroeconomic policy mix is focusing toward stabilization. Specifically, the transmission of SBP’s policy rate hikes by 175 bps since January 2018 is still unfolding. The government is also now pursuing a fiscal consolidation program and has further announced regulatory measures to slow down the growing pressures on the external front. As a result, domestic demand is projected to decelerate in the coming months of FY19.”
The SBP projects the real GDP growth for FY19 to be around 5 percent. “The recent monetary and fiscal measures are likely to affect large-scale manufacturing. The latest information shows that cotton production is expected to miss its FY19 target of 14.4 million bales, with downside implications for agriculture sector growth. The ancillary services sector is expected to miss its FY19 target as well. Some positive impact is expected from the contribution of exports-led production and higher fertilizer production amidst depleting stocks and better availability of energy,” the statement added.
The central bank also noted that the current account deficit continues to pose a challenge. “Despite some growth in workers’ remittances and exports in the first two months of FY19, a notable increase in the value of oil imports has kept the current account deficit at $2.7 billion, as compared to $2.5 billion, in the corresponding period last year despite non-oil imports declining during the period. Owing to these developments SBP’s net liquid foreign exchange reserves have declined to $9 billion as of Sept. 19, 2018, compared to $9.8 billion at the end of FY18,” the central bank added.
The SBP noted: “Non-oil imports are responding to the contraction measures, a surge in oil prices is masking this improvement, and as a result the current account deficit remains high; rising trends in inflation mean that real interest rates have fallen and further, the unfolding global developments, whether in terms of oil-price shocks, protectionist trade policies and falling flows to the emerging markets, are the factors that all pose challenges to macroeconomic management in Pakistan.”
The SBP has aggressively raised interest rates during the calendar year. “We believe this will partially help in containing demand and import growth. But more measures need to be taken on the fiscal side to control external account issues,” Muhammad Sohail, financial expert and CEO of Topline Securities, commented.
However, some expert negate the notion that the interest rate hike will play an effective role in containing inflation. “Empirical evidence suggests that the interest or currency rate changes do not play an effective role in subduing inflation and increase the cost of capital in the economy. The rates should be kept stable at the lower side so that the economy can grow,” said Khurram Schehzad, senior financial analyst at JS Global Capital.


Saudi Arabia’s AI imperative: seizing the agentic enterprise to fulfill Vision 2030 goals

Updated 11 January 2026
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Saudi Arabia’s AI imperative: seizing the agentic enterprise to fulfill Vision 2030 goals

  • Workers who use AI daily are 64% more productive and 81% more satisfied with their jobs

RIYADH: As Saudi Arabia advances its ambitious Vision 2030, a transformative shift in the global workplace underscores a critical opportunity for the Kingdom’s organizations.

Slack’s latest Workforce Index survey revealed an unprecedented surge in the adoption and impact of artificial intelligence, presenting a clear pathway for Saudi businesses to lead in the era of digital labor, drive economic diversification, and create high-value roles for the future workforce.
“Saudi Arabia has all the ingredients to lead this shift: a young population, a government willing to modernize at extraordinary speed and industries preparing for global competition,” Mohammad Al-Khotani, the senior vice president and general manager of Salesforce Middle East told Arab News.

From adoption to advantage
The evidence that AI is a decisive competitive advantage is now overwhelming. Slack’s research, which surveyed 5,000 global desk workers, found that daily AI usage has soared by 233 percent in just six months.
Workers who use AI daily are 64 percent more productive and 81 percent more satisfied with their jobs than their non-AI-using colleagues. This trend is even more pronounced in specific markets; in the UK, daily AI users report an 82 percent increase in productivity and a 106 percent boost in job satisfaction.
According to the report, this surge is fundamentally reshaping work. The data confirms that trust grows with use: workers who use AI agents daily are twice as likely to trust them in areas like data protection and accuracy. 
Furthermore, AI is enabling workers to expand their capabilities strategically. Some 96 percent of AI users have leveraged the technology to perform tasks they previously lacked the skills to do.
Workers are now 154 percent more likely to use AI agents to perform tasks better and more creatively, not merely to automate them. The top productivity boosts come from eliminating extensive research, assisting with communication, and overcoming creative blocks.
Given this, Al-Khotani emphasized the macroeconomic imperative for Saudi organizations to lead, not follow. 
“Saudi Arabia is one of the few countries where the public sector has already set a global benchmark for digital service delivery. This creates a macroeconomic condition in which private-sector organizations must now match the pace set by the state,” he said. 
He further noted that “the scale of Saudi Arabia’s transformation, megaprojects, tourism growth, manufacturing build-out and new digital sectors, requires the productivity lift that only digital labor and AI agents can provide. Organizations that adopt early will move faster, earn citizen trust and gain market share.”
This perspective is echoed by Mohamad El-Charif, founder of the Middle East’s first sovereign regulatory compliance platform, Qadi.
“When we talk about digital labor in Saudi Arabia, we have to acknowledge that legal and regulatory AI is not optional. If we wait and come in as fast followers, we’ll end up running our core legal and regulatory workloads elsewhere, governed, and updated elsewhere,” he explained to Arab News. 
He argued that early adoption creates a lasting advantage: “Moving early with governed, sovereign agents, lets Saudi organizations encode their own local laws, internal policies, escalation paths and audit trails into the infrastructure.”
He added: “Under Vision 2030, leading Saudi banks, insurers, telcos, and energy companies are not just serving the domestic market; they’re becoming global players. If they build their regulatory backbone early and on their own terms, they don’t just stay in bounds at home, but they also carry that infrastructure with them as they expand.”

From automation to the agentic enterprise
This ground-level adoption aligns with a strategic corporate pivot identified in the 2025 MuleSoft Connectivity Benchmark Report, produced in collaboration with Deloitte.
The report highlighted that generative AI has reshaped human-AI interaction, and the next frontier is the rise of the “agentic enterprise.” This model involves autonomous AI agents that can operate with unprecedented independence, responding to queries, managing sophisticated tasks, and optimizing workflows without continuous human intervention.
The report found that 93 percent of IT leaders intend to introduce such autonomous agents within two years, with 40 percent having already done so and another 41 percent planning deployment within the next year.
This shift is accelerating rapidly; the average number of AI models in use has already doubled from 2024 projections, and IT leaders predict a further 78 percent increase over the next three years.
Salesforce Middle East’s Al-Khotani elaborated on this strategic potential, stating: “AI agents offer a multiplier effect across sectors that Vision 2030 prioritizes. This same efficiency can shift the economics of different industries.”
He added: “Legacy sectors can automate routine compliance, scheduling, documentation, onboarding and case resolution. Public services can move from reactive to proactive, anticipating citizen needs and completing tasks autonomously.”
Qadi’s El-Charif described this as turning “compliance from a blockage into an API,” accelerating Vision 2030’s ambitions. 
“For a thriving economy, the biggest gift you can give businesses is predictable, low-friction compliance,” he said, adding: “When you encode local laws, regulations and internal policies into agents, those checks move inside the workflow. Approvals can happen in days, not months, without lowering standards.”
However, this potential is gated by integration. Some 95 percent of IT leaders cite integration challenges as the primary hurdle to effective AI implementation. 
Organizations use an average of 897 applications, with 46 percent using over 1,000, yet integration levels have stagnated.

Opportunity for the Kingdom
For Saudi organizations, moving early to adopt and integrate AI is no longer optional, but a strategic necessity to lead in digital labor and deliver on Vision 2030’s goals of a vibrant society, a thriving economy, and an ambitious nation.
First, deploying AI in ways that deliver positive outcomes for both business and employees is key. The Slack Index showed that AI enhances human connection, not replaces it.
Daily AI users are 246 percent more likely to feel more connected to colleagues and report a 62 percent higher sense of belonging. This counters fears of displacement, showing AI can augment teamwork and culture.
Al-Khotani stressed the principles for positive deployment, noting: “AI must be introduced as augmentation, not substitution. When people understand that agents are handling low-value tasks, while humans focus on creativity, judgment and customer relationships, acceptance is extremely high.” 
He added that Salesforce data shows 84 percent of AI users say the technology makes them enjoy their job more, largely because it reduces repetitive work.
El-Charif advocated for a practical Outcome-Workflow-Governance framework to achieve this symbiosis, saying: “We design agents to take over that ‘read, retrieve, reconcile’ loop. 
“This doesn’t replace humans, but it elevates them out of the infrastructural gridlock.” 
He added: “That, for me, brings a real opportunity of using agentic AI to remove the glue work that exhausts people, and free up talent to focus on strategy, relationships and judgment, which is exactly what Vision 2030 is asking our institutions to excel at.”
Agentic AI can directly accelerate Vision 2030 ambitions. As noted by Goldman Sachs Research, generative AI can streamline business workflows, automate routine tasks and give rise to a new generation of business applications.
For Saudi Arabia, this means modernizing legacy sectors, improving efficiency in health care and financial services, and supercharging nascent industries. 
The MuleSoft report confirmed that APIs and API-related implementations now account for 40 percent of company revenue on average, up from 25 percent in 2018, demonstrating the tangible economic value of a connected, AI-ready infrastructure.
El-Charif also highlighted the societal dimension, stating: “For a vibrant society, this technology drives transparency and trust. When rules are encoded into agents, their application becomes consistent and audit-ready. This builds confidence in the market and investors know that compliance isn’t subjective, but structural.”
Finally, this transition will create high-value roles for humans. The integration challenge itself is a source of future jobs. The MuleSoft report found that developers spend an estimated 39 percent of their time building custom integrations, and IT staffing budgets are expected to rise by 61.5 percent year-over-year to meet AI demand.
Al-Khotani foresees specific new roles emerging from the AI integration challenge, saying: “Salesforce’s research shows that organizations adopting AI expect their data and integration teams to grow nearly 50 percent over the next three years.” 
He went on explaining that this opens pathways for new roles such as AI integration architects, agent workflow designers, and responsible AI officers and digital trust specialists.
El-Charif identified the emergence of roles such as “Legal Engineer,” — someone who understands both the regulation and how to encode it into logic.
Furthermore, as AI handles routine tasks, workers are freed for more strategic, creative, and innovative work, precisely the skills needed for a knowledge-based economy. 
Al-Khotani envisioned this shift elevating Saudi Arabia’s broader economic structure: “As agents take on routine and administrative tasks, Saudi Arabia’s workforce will shift toward higher-value roles that emphasize creativity, human judgment, and strategic decision-making.”
He added that this shift increases productivity per capita, a core Vision 2030 outcome, because the workforce is no longer limited by the volume of manual work it can process. “The macroeconomic structure becomes more innovation-driven and less labor-intensive.”
Global AI adoption is accelerating, worker productivity and satisfaction are skyrocketing with its use, and the next wave of enterprise value lies in agentic AI.
For Saudi Arabia, the mandate is to build the robust, integrated digital foundations today that will allow its organizations and workforce to not just participate in this future, but to lead it, turning the promise of Vision 2030 into an intelligent, automated, and human-centric reality. 
As Al-Khotani concluded: “The future economy will not reward automation alone, it will reward nations that use AI to elevate human potential. Saudi Arabia is positioned to be one of them.”