Almost a week after the PTI government presented its budget for fiscal year 201-20, State Bank of Pakistan (SBP) Governor Dr Reza Baqir said on Monday that its economic team is undertaking steps to stabilise the country’s economy.
Addressing the media in Karachi, the SBP chief said the government’s economic plan envisaged stabilising the situation, which will lead to higher and inclusive growth, ultimately passing the benefits to middle and lower classes.
Dr Baqir, who left the IMF to join the central bank earlier this year, said the country’s external and fiscal deficits, as well as the causes of instability were being addressed.
He expressed satisfaction over the country’s economic future, adding that measures were also in place to cope up with the exchange rate and inflation.
“The fixing of exchange rate for a long time led to an increase in external deficit and depletion of our reserves,” he said.
Dr Baqir announced that the unlike previous governments, the present government will not borrow from the SBP.
Last month, International Monetary Fund signed an agreement of $6 billion bailout package for three years aimed at shoring up fragile public finances and strengthening a slowing economy.
Officials had forecast growth of 4% for the next financial year, but the government trimmed its growth estimate for the coming year to 2.4%.
Inflation, which hit 9% in May, is seen accelerating to between 11% and 13% during the next fiscal year.
Under the IMF’s terms, Pakistan is also expected to let the rupee currency weaken to help correct an unsustainable current account deficit and cut its debt while trying to expand the tax base.