Governor of the State Bank of Pakistan Dr. Reza Baqir has said that the significant policy measures taken by the State Bank prior to the COVID-19 outbreak have significantly strengthened the external and financial foundations.
He was speaking at the Institute of Chartered Accountants of Pakistan (ICAP) 2021 CFO Conference entitled “Global CFO Perspective -360 Degrees”, where he said that with timely SBP support, GDP growth for the current fiscal year will be 4 percent. and more than in future years.
Although the challenges facing developing countries are huge and cause persistent economic, social, and development pressures. However, he said Pakistan managed to control its external imbalances during Covid-19 because its economic foundations were strong. Pakistan is one of the few countries to achieve fiscal stability in 2020 despite the Covid pandemic. As a result, one of the smallest increases in public debt was recorded.
Pakistan also managed its budget deficit, resulting in a lower increase in government debt compared to other countries, despite Covid-19. He added that compared with developed countries, the growth was 1-2 percent, in comparison with 10 percent of developed countries.
The SBP cut its interest rate by 650 basis points and took a series of fiscal measures to support the economy. He stressed that SBP has appropriately targeted the financial dimension through expansion management and that this policy has received international recognition.
However, the SBP governor emphasized structural reforms for long-term economic growth. “We will now carry out structural reform to increase investment and achieve sustainable export growth,” he said.
He added that the epidemic has pushed for a global economic restart with long-term consequences, including reduced investment and erosion of human capital to reduce productivity, limited income growth and structural transformation in countries around the world.
Despite the Covid-19 coronavirus, we have been able to increase our total and net reserves. We need to diversify our export base, as other countries have done.
He said that during Covid-19, the SBP provided targeted economic assistance of around Rs 2 trillion to support the economic recovery through several measures. These include a 650 basis point cut in interest rates, deferred capital expenditures and loan restructuring, a wage financing system to avoid duplication, and concessional financing for industrial and sewerage investments.
The SBP governor said financial support during Covid-19 was targeted at the most vulnerable, especially through the Ehsaas program. He also added that government debt and deficits are under control, which is boosting market sentiment, investment expectations and economic recovery.
He said that before the outbreak of the pandemic, Pakistan managed to control the current account deficit and now the current account is also in surplus and foreign exchange reserves have reached their highest level in 4 years thanks to a well-calculated political reaction.
On this occasion, he also congratulated ICAP for organizing the CFO conference in 2021 and praised the institute’s contribution to the economy.
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