SBP issues clarification/rebuttal in response to misleading news story on SBP Governor’s remarks

February 22, 2019 (MLN): The State Bank of Pakistan has issued a clarification in reference to the story entitled ‘Pakistan has come out of financial crisis: SBP governor’ published on 19th February, 2019 and the editorial entitled ‘SBP governor’s remarks’ published on 20th February, 2019 in an English daily.

The SBP has said the factual position is rather different from the insinuations attributed to Governor’s interaction with the press. In fact, the conversation reported in the story and the editorial attributed to the Governor SBP are both misleading.  The SBP has given a link to the press conference to clarify what was actually said.

SBP further said “Assuming these premises the editorial goes on to claim inconsistencies between SBPs monetary policy statements and its quarterly/annual reports, and the purported statements of the Governor at the press conference.

You will appreciate that publishing a story and editorial without fully verifying the facts, particularly during the times in which important stabilization measures are working their way through the economy, weakens public confidence while unhinging expectations.”

On the question of whether the Federal Government had crossed the limit set for SBP borrowing, the Governor had only clarified that that the law i.e. Section 9C of the SBP Act does not set any limit on Government borrowing from the State Bank. He further explained that under the said law GOP was required to bring its SBP borrowing to zero at the end of each quarter and if it does not then the Finance Minister has to make a statement on the floor of the house. This was a clarification given on a specific question and in no way changes the SBP stance that borrowing from SBP is more inflationary than borrowing from commercial banks, the press release from the SBP clarified.

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