SBP governor clarifies Wall Street Journal story

Says Pakistan faces no risk in making IMF repayments.

KARACHI: State Bank of Pakistan (SBP) Governor Yaseen Anwar has said, in a rebuttal to a story published in the Wall Street Journal (WSJ) on May 29, 2012, that Pakistan will not face any risk in making repayments to the International Monetary Fund (IMF). “We face no risk in being able to make next year’s IMF payments from our adequate reserves,” he said.

In his letter, published in the WSJ on Thursday, he clarified that the decline in Pakistan’s projected reserves will be partially offset by an increase in remittances which will exceed $13 billion this fiscal year; and additional foreign direct investment in the pipeline that includes US company investments in the power sector.

He said that the entry of new foreign banks, increased small- and medium-size enterprise lending to increase employment, huge potential for the agriculture sector and the export potential for dairy products as the fourth largest milk producer in the world, and the development of capital markets to support housing finance are positive developments in the country’s economy.

SBP had stated that gross domestic product is expected to be closer to 4% this year than the 3% as reported by WSJ, he explained. “It would have been nice to see a more positive light on these factors which will, in my view, be a positive toward alleviating manageable stresses going forward,” the Governor’s letter to WSJ said.

Published in The Express Tribune, June 1^st, 2012.