July 21, 2022 (MLN): The State Bank of Pakistan (SBP) on Wednesday said that Pakistan’s situation is better than Sri Lanka and Ghana as the government has taken all the difficult steps despite political rhetoric.
State Bank officials in an informal conversation with media representatives said “Pakistan is not defaulting, Pakistan will never go to the default”, adding that Pakistan is in a comfortable position to meet its external financing requirements.
Central Bank officials urged the urged the people to not compare economic situation of Pakistan with Sri Lanka. Sri Lanka's fiscal position has been much worse than Pakistan.
Pakistan’s debt-to-GDP ratio was less compared to Sri Lanka and it had taken two years to make necessary adjustment in terms of the balance of payment and the exchange rate, they said, adding that Primary deficits of Sri Lanka were 3 to 4 times larger since Covid-19.
With regards to Rupee devaluation, SBP said that the current political situation is one of the reasons for depreciation of rupee against dollar.
The recent increase in the value of the dollar is not due to any precondition of the IMF, but Pakistan’s import bill and political instability.
SBP monitoring economic developments in the country and taking steps to consolidate rupee value, SBP added.
To note, PKR nosedived by Rs2.99 on Wednesday and settled at Rs224.92 per USD compared to Rs221.99 per USD on Tuesday.
SBP officials further highlighted that current financial year 2022-23 will be the most difficult year in terms of the economy.
With regards to IMF program, SBP said that it is on track and being extended. Compare to high-risk emerging markets Pakistan is less vulnerable due to the ongoing IMF state program, it added.
In case of political instability, SBP said that IMF has no problem in working with the caretaker government, adding that friendly countries will also provide financial support to Pakistan along with IMF.
On the GDP front, SBP underlined that Pakistan economy is being stabilized and can afford to slow down after two consecutive years of near 6% growth.
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