June 17, 2019 (MLN): The government will not borrow funds from the State Bank of Pakistan (SBP) in upcoming fiscal year 2019-2020, said governor central bank Mr. Reza Baqir.
At a press conference that aired live on SBP’s official social media handle, the governor spoke on Pakistan’s economic outlook and the role of SBP in it, stating that instead of borrowing from the SBP, the government will borrow directly from the market.
“We have adopted market based policy and SBP will monitor the demand and supply within the economy,” he said.
Apart from this, he also opined that free float is not suitable for the Pakistan. Sentiments sometimes cast a shadow on the fundamental requirements and free float is not our policy, he said.
Upholding the persistently sliding value of PKR at interbank, the governor said that depreciation helps in improving the external deficit, adding that the government has resolved to put the economy back on track and is taking suitable steps to reduce the twin deficit.
“While the exchange rate change has helped control the imports we are working on several other proposals to increase exports. The currency has recently witnessed a two way movement. Before Eid, the rupee hit 152 per USD and also saw the 148 per USD level.”
He pointed out that the inflows surged which had helped the local currency to gain, however it depreciated because of seasonal factors.
“Before June close several companies have to clear their debts which put a heavy pressure of the rupee.”
The incumbent government’s primary aim is to reduce uncertainty and to reduce poverty from the country.
In response to a representative for Mettis Link News, when asked if the SBP is comfortable with the positive interest rate differential between interest rates and the rate of inflation, governor SBP responded that for the future, “we would like to add flexible inflation targeting framework and would give target assessments in July at the next Monetary policy meeting where we will assess the inflation data and see whether further tightening is a requirement.”
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