Despite all odds, Pakistan’s central bank remains confident that the country will achieve a higher economic growth of close to 5% in current fiscal year 2021-22 and the International Monetary Fund (IMF) will soon announce the resumption of $6 billion loan programme.
“The economy grew 4% last year (FY21) and it is expected to expand close to 5% this year, which is a welcome challenge for us,” said State Bank of Pakistan (SBP) Governor Reza Baqir on Friday while speaking at the Pakistan Banking Awards 2021.
“The government of Pakistan and finance adviser (Shaukat Tarin) have clearly stated that we are very close to reaching an agreement with the IMF for the next review,” he said.
Baqir was of the view that the achievement of higher economic growth would not be an easy task since the country recorded a sluggish growth in the past two years. However, he said, the government and the central bank were ready to implement all measures to support economic growth without compromising on the external economy.
“We want to take the growth challenge because for the past two years, growth has actually been slowing down and turned negative (during Covid-19),” he said.
The market discussed whether the growth would be sustainable and “I want to point out that at the State Bank of Pakistan, it is our job to continue it and we are determined to take all measures that we think are necessary to ensure that growth remains sustainable.”
The bigger point was the determination expressed by the government when it saw the journey ahead in partnership with the IMF. “It is also a fact that we have confidence in the direction of our policies,” he said.
Secondly, he said, Pakistan’s partnership with friendly countries would continue to support the country’s external economy.
Recently, the Saudi Arabian government has announced that it will deposit $3 billion with the State Bank and provide another $1.2 billion financing for energy imports after Prime Minister Imran Khan visited the kingdom.
“These (support from friendly countries) are the measures which will further support our external development over and above the IMF engagement,” he said.
Pakistan’s economy performed much better than anticipated by the IMF last year. The GDP growth, current account deficit, foreign exchange reserves and external debt all turned out to be in a much better position compared to the IMF projections, he said.
The market-based exchange rate mechanism is ensuring the achievement of a sustainable external economy.
Published in The Express Tribune, October 30th, 2021.
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