WASHINGTON
\nState Bank of Pakistan (SBP) Governor Jameel Ahmad has said that the country was striving to rebound strongly from the current economic challenges, including external financing woes and record inflation.
\nHe stressed that Pakistan\u2019s economy had \u201calways rebounded strongly after undergoing severe shocks\u201d. \u201cNo doubt, this time, we have faced not one but a series of domestic and global shocks. But we strive to rebound strongly from the current challenges as well.\u201d
\nAccording to a statement issued by the SBP, the Governor made the remarks while addressing international investors and fund managers at an event organised by Barclays in Washington, United States on Pakistan\u2019s economic challenges and the way forward.
\nThe Governor SBP briefed the participants about the challenges being faced by Pakistan, its policy response and the way forward for the country to address such challenges. He noted that the economic challenges, including high inflation and balance of payments pressures, were largely driven by \u201cadverse global shocks and domestic developments\u201d. Governor SBP also responded to the questions asked by the participants.
\nEven though global commodity prices had fallen from the peak reached in 2022, they were still \u201csignificantly high\u201d and thus, were taking a toll on domestic inflation and the current account, he elaborated. The rupee has depreciated sharply over the last few months, which has increased the cost of living for consumers in the heavily import-dependent country.
\nAt the same time, the SBP chief said, tightening global financial conditions have made it harder for emerging markets such as Pakistan to access international financial markets. Consequently, this put stress on the country\u2019s foreign exchange reserves, which have fallen to critically low levels in recent months, and the exchange rate.
\nThe devastating floods of 2022, which caused damages of $30 billion, had worsened the country\u2019s economic distress, he pointed out. Ahmad also spoke about the country\u2019s external balance of payments situation, noting that Pakistan had met all its obligations in a timely manner contrary to earlier market expectations.
\n\u201cThe country\u2019s debt repayments have been rather front-loaded, whereas inflows have been gradual,\u201d he explained. He said the country was receiving fresh financing in addition to loan rollovers ahead of the expected revival of a loan programme with the International Monetary Fund (IMF).
\nElaborating on the central bank\u2019s policy measures, the SBP chief said it had raised the benchmark interest rate by 1,400 points to 21% in the last 18 months and tightened regulations to rein in inflation and reduce the current account deficit.
\nThe State Bank\u2019s foreign exchange reserves, after touching a low of $2.9 billion by 3rd February, have since recovered to $4.2 billion by 31st March. In addition, the exchange rate had adjusted over the last few months, which he termed the \u201cfirst line of defence against emerging external imbalances\u201d.
\nThe fiscal deficit had reduced due to the government\u2019s contractionary fiscal policy, despite flood rehabilitation-related expenditure. The primary balance was also in surplus so far compared to a deficit last year, he noted.
\n\u201cThe country is on its way to achieving macroeconomic stability, as the impact of policy measures is already playing out in the economy. The current account deficit has narrowed and foreign exchange reserves, albeit low, are increasing,\u201d he remarked.
\n\u201cInflation was expected to decrease in the coming months while the revival of the IMF programme would remove uncertainties regarding external financing,\u201d Ahmad added.
\nGovernor SBP also highlighted that the country has undertaken a series of reform measures \u2013 including the strengthening of the central bank\u2019s operational autonomy; prohibition of government borrowing from the central bank; AML\/CFT-related regulatory interventions; and measures to increase digitalization in the economy.
\nThese measures have addressed many structural weaknesses and will allow the economy to pick up sharply once the country is through the current challenges. The SBP Governor emphasized that Pakistan\u2019s economy has always rebounded strongly after undergoing severe shocks.
\n\u201cWe saw this happen after the devastating earthquake of 2005; the floods of 2010; and recently after the Covid-19 pandemic. No doubt, this time, we have faced not one but a series of domestic and global shocks. But we strive to rebound strongly from the current challenges as well, he said in his concluding remarks.<\/p>\n","protected":false},"excerpt":{"rendered":"
WASHINGTON State Bank of Pakistan (SBP) Governor Jameel Ahmad has said that the country was striving to rebound strongly from the current economic challenges, including external financing woes and record inflation. He stressed that Pakistan\u2019s economy had \u201calways rebounded strongly after undergoing severe shocks\u201d. \u201cNo doubt, this time, we have faced not one but a […]<\/p>\n","protected":false},"author":2,"featured_media":260846,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-325968","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\n