Uncertainty and instability were serious challenges, economic team tackled situation very effectively, says SBP governor
KARACHI: Governor of State Bank of Pakistan (SBP) Reza Baqir on Monday assured that the country has come out of the economic crisis as it has achieved economic stability, which has created investors' confidence that is very positive signal.
"Uncertainty and instability were a serious challenge to the country, which is now over as the economic team tackled the situation very effectively. Pakistan's future is bright," Baqir said, while speaking during his first interaction with media men here at the SBP Building. He also answered questions by journalists in Islamabad through a video link.
The SBP governor said the present government had assigned two major tasks to its economic team: bringing economic stability and ensuring inclusive economic growth in the country, where there is improvement in the life of the common man.
"The two main reasons for the economic instability were external deficit and fiscal deficit. Now, these were being addressed effectively and in credible manner," he said.
Baqir further stated that it quite a positive development that the government had pledged not to borrow from State Bank of Pakistan. Instead, he added, it would borrow from the money market.
"This would save State Bank of Pakistan from printing new notes which pushed inflation," the SBP governor said.
About the exchange rate, he said a fixed rate or free float currency policy was not in favour of the country, rather, the SBP had adopted the market-based policy for it.
"With increase in exchange rate, the trade deficit is coming down," Baqir said.
Regarding the key interest rate, he said the SBP's Monetary Policy Committee did take into account the projected inflation before fixing it.
"We shall be fighting inflation to our best," the SBP governor reassured, saying the interest rate was the best tool to control inflation.
He said the state bank had to work for three objectives: financial stability, maintaining exchange rate and for sustained economic growth.
Baqir defended the agreement being signed with IMF, saying it had sent positive signals to the entire world about financial stability in Pakistan that had also built confidence among the local and foreign investors.
After that, he noted, Pakistan Stock Exchange also strengthened.
"Going for IMF loan, everything was being done in the interest of the country," the SBP governor said, adding that all IMF conditions were duly fulfilled.
He informed the media that on July 3, 2019 IMF Board of Directors meeting would be held and all details would be published which would make things clear about the deal with the world credit body.