Karachi, March 04, 2020: State Bank of Pakistan (SBP) Governor Dr Reza Baqir Tuesday said that the International Monetary Fund (IMF) is government’s partner in reforming the country’s current economic system.
In a briefing to the Public Accounts Committee (PAC) under the chairmanship of Rana Tanvir Hussain, the governor further said the relationship with IMF is based on mutual interest.
He assured the house that in coming days the inflation will go down and general public will feel the relief.
He said monetary policy committee in its recent sitting decided to keep the policy rate unchanged at 13.25 percent.
Dr Baqir said the MPC also viewed the current monetary policy stance as appropriate to bring inflation down to the medium-term target range of 5-7 percent over the next six to eight quarters.
He said, bringing down the interest rate will affect the people who have kept their savings in the banks, however higher interest rate on the other hand is creating difficulties for the borrowers.
National savings rate is already very low therefore and if the people are discouraged than the country will have to borrow the money from international agencies which will raise the current account deficit, he added.
Responding to the quarry, he said the function of the State Bank is to maintain the foreign reserves and in June last year the foreign reserves were $ 7 billion whereas the liability was $ 8 billion and now the reserves are $12 ½ billion and the liability is $ 4 billion.
He said people’s trust on exchange rate in the market is growing and people are converting their dollar accounts into Pakistani currency and if the foreign reserves will grow, Pakistan will not have to approach international agencies for borrowing.
He said because of the higher interest rate in the past, manufacturing was almost ended and it’s on the rise now because of the government’s economic reforms despite the higher interest rate.
He said, on the capital control, the IMF has revised its position however the situation in Pakistan is bit different.
He said the present government did not take loan from the State Bank of Pakistan due to which inflation is under control however, the state bank at the same time making efforts to restore the confidence of foreign and local investors.