Further decline in interest rate possible with primary surplus: Riazuddin

July 11, 2024 (MLN): Interest rates are expected to decline further in the future if the government succeeds in achieving a primary surplus in the fiscal year 2023-2024, stated Riaz Riazuddin, former deputy governor of the State Bank of Pakistan during a CFA Society Pakistan seminar.

The consolidated expenditure and revenue data is expected to be released by around mid to end-August, which will confirm whether the government has achieved a primary surplus, Riaz said.

The government has achieved a primary surplus of Rs1.62 trillion (1.5% of GDP) in the first nine months of FY24, as against a primary surplus of Rs503.8 billion (0.6% of GDP) in the same period of last year.

Although there might be temporary pauses, but if inflation continues to decrease monthly, interest rates are expected to decline further in the future, he further added.

To note, the central bank lowered its key policy rate by 150 basis points to 20.5% last month. The reduction was the first in almost four years.

The central bank had kept borrowing costs at a record 22% since June 2023.

CFA Society Pakistan hosted an in-person seminar on "Monetary Policy and Exchange Rate Outlook for FY 2024-25."

The speakers included Riaz Riazuddin and Murtaza Syed, who shared invaluable insights on Pakistan’s monetary policy and exchange rate.

This was followed by a panel discussion moderated by Asif Qureshi, CFA, Director of CFA Society Pakistan. The discussion also featured Adnan Ashraf Ghumman as a panelist.

Abdul Rehman Warraich, CFA, Commissioner of SECP, who was the chief guest, emphasized the importance of sincere dialogue and candid conversations between stakeholders for insightful policymaking.

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