KARACHI: Governor State Bank of Pakistan (SBP) Reza Baqir has said the economy had begun to show signs of improvement, adding that with measures were in place and inflation would also start easing soon.
Speaking at Karachi Chamber of Commerce and Industry (KCCI) on Monday, Reza Baqir said exchange rate had stabilized, trade and current account deficits were shrinking at a fast pace. “Things are comparatively better compared with the situation four months ago”.
“The GDP growth is still low, but the growth is positive. Some sectors have even shown double digit growth in the last quarter.”
Baqir said reform program had just begun, and IMF’s first review was completed successfully, which was an achievement.
“The quantum of exports is increasing, which suggests that local manufacturing is increasing. Moreover, import substitution is increasing as the cost of imports, particularly of those products which are manufactured locally, has gone up,” Governor SBP said.
He said foreign exchange had restarted flowing back to the country, which would augment reserves and help exchange rate.
Talking about the interest rates, Reza Baqir said the policy rates were directly linked with the projected inflation, which at present was 11-12 percent. “Measures are in place and once the inflation comes down, the Monetary Policy Committee (MPC) would definitely consider it while deciding the discount rates.”
He informed that the central bank had launched several SME financing and export refinancing schemes and urged the business community to avail the same. “SMEs are very important for us and several commercial banks have already increasing their exposures to the SME financing,” he said hoping other commercial banks would also follow the same”.
Earlier, former President KCCI Siraj Kassim Teli had complained of higher interest rates, which resulted in higher cost of doing business. “The discount rate should be in single digit as in most of the countries of the world,” Teli said.
“The interest rates are on upward trajectory for some time and I hope the targets linked with higher interest rates are achieved. Therefore, it is requested that the central bank start easing the rates from the upcoming monetary policy,” Teli opined.
The business community also complained that commercial banks were not facilitating the SME sector and urged the Governor SBP to launch soft loan schemes for all sectors of the economy.