Baqir projects sustainable growth

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KARACHI:

Unlike in previous years, Pakistan’s economic growth will be sustainable this time around due to a persistent upward trend in remittances, large inflows through Roshan Digital Accounts (RDA) and an expected increase in remittances. exports through the refinancing facility, said the State Bank of Pakistan (SBP). Governor Reza Baqir.

Speaking at a session titled “The Future of Pakistan’s Economy” at the Islamabad Leaders’ Summit on Wednesday, Baqir said the textile sector aims to boost exports by $ 5 billion after the import of modern machinery with the help of the Temporary Economic Refinancing Facility (TERF) was installed.

He added that foreign exchange reserves were increasing due to the receipt of large remittances and large inflows through the GDR. He cherished that on average 1,000 RDAs were open each day.

The governor expects economic growth to consolidate further as the capacity of the export-oriented industry expands, with businessmen upgrading their units with advanced equipment imported under TERF.

Speaking about how monetary and fiscal policies would contribute to the on-going growth momentum, the SBP Governor noted that SBP policies have started to respond immediately to the deterioration in macroeconomic indicators.

“The current account deficit has been increasing since June 2021 and the exchange rate started to adjust in May. Therefore, our policies are responding in a timely manner,” he said. “We now have a market based exchange rate and it acts as a natural shock absorber. “

He lamented that macroeconomic policies had been delayed in previous years when imports increased and the current account deficit widened and, as a result, the government had to devalue the rupee.

“When imbalances increase and corrective decisions are delayed, difficult action must be taken,” he said.

He believed that immediate and timely reactive measures would contribute to the sustainability of growth.

Speaking about the SBP’s key rate hike, he said that when the central bank observed a continued widening of the current account deficit, the monetary policy committee acted to moderate demand and raised the policy rate.

He lamented that due to the absence of structural reforms, Pakistan’s ability to produce goods and services is limited and the country has no choice but to import when demand for products has increased. more than the offer.

Dismissing claims that foreign exchange reserves were increasing due to borrowing, he said net international reserves had increased by $ 16 billion since June 2019.

He clarified that net international reserves excluded foreign loans and that the increase reflected the fact that reserves were not increasing due to foreign borrowing.

The SBP governor stressed that there had been a steady improvement in the external account over the past year despite the Covid-19 epidemic.

He said that the KSE-100 index rose 30% from June 2019 to January 2020 and that before the Covid-19 pandemic in Pakistan, Bloomberg called the Pakistan stock exchange one of the best in the world and best in Asia.

Posted in The Express Tribune, September 23e, 2021.

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