SBP moving to digitalise payment processes

Since June 2019, Pakistan has transitioned to a market-based exchange rate, resulting for the first time ever in an orderly two-way movement of exchange rate in the country, which has led to a significant shrinking of the current account deficit, and better fundamentals have facilitated capital inflows.

This was stated by State Bank of Pakistan (SBP) Governor Reza Baqir during an interactive session with leading foreign investors and members of the Overseas Investors Chamber of Commerce and Industry (OICCI), as he shared an overview of the current economic outlook of Pakistan.

“The fiscal deficit narrowed to 3.8% of GDP (gross domestic product) in Jul-Mar FY20 with the current account balance in surplus for the first time since 2016.”

He added, “A year ago, the SBP was being perceived as inflicting tough stabilisation measures after Pakistan had successfully started an economic reform programme to address external and fiscal imbalances. Later, after the onset of Covid-19, the government and central bank gave a timely and calibrated economic response without compromising buffers and as a result today the focus is on economic growth of the country.”

Baqir shared that overall Rs1.73 trillion or 4.1% of GDP was injected by the central bank into the economy to support individuals and businesses during Covid-19 through various proactive measures. These included a significant reduction in interest rate from 13.25% to 7%, loan deferment, employment support and Rozgar schemes.

He stressed that the SBP was taking appropriate and timely actions to address the ever-changing economic environment. Also speaking on the occasion, OICCI President Haroon Rashid highlighted the significant economic contribution of foreign investors associated with the OICCI, who were among the largest economic stakeholders.

He shared that they had invested over $16 billion in the past eight years and continued to have a positive view of investment opportunities despite the ongoing challenging economic environment in the country.

The OICCI informed the governor about key concerns of its members, including delay in approval of foreign exchange payments and cumbersome documentation requirements, and sought the governor’s support in light of the SBP policy to facilitate foreign direct investment (FDI) through ease of doing business in Pakistan.

Baqir appreciated the contribution of OICCI members to the national exchequer and encouraged all its members to figure out ways of increasing exports and adopting import substitution practices, as it was a critical step towards steering the country out of poverty.

“The SBP is moving towards digitalisation of payment processes and proactive engagement that will address major issues systematically and facilitate the business community,” he remarked. He revealed that through an online case look-up portal, “it is now possible for companies to monitor the progress of their respective cases submitted to the SBP with increased transparency”.

He agreed on the need for continuous dialogue with the OICCI members and invited them to meet the SBP leadership at regular intervals for timely resolution of issues.

Appreciating the SBP’s efforts towards continued improvement in the economy, the OICCI president shared a comprehensive list of recommendations to facilitate ease of doing business in Pakistan.

Published in The Express Tribune, November 11^th, 2020.

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