Only monetary rate can 'fix economy'

As the SBP is set to announce its monetary policy on October 30, interim Finance Minister Dr Shamshad Akhtar on Saturday said only its key interest rate could correct the course of the economy in the face of fiscal imbalance because of the ever-widening gap between revenue and spending.
“If the fiscal account is unbalanced and the current account deficit is high, only the monetary rate can fix the situation,” she added while speaking at a function organised by the Korangi Association of Trade and Industry (KATI) in Karachi.
She continued that the results were being witnessed in the form of an improvement in the current account. The minister conceded that the current caretaker set-up had not eliminated or controlled inflation, but claimed that it was decreasing.
Dr Akhtar maintained that the World Bank and International Monetary Fund (IMF) programmes were being implemented effectively. She added that an IMF delegation was arriving in Pakistan on November 2 and it would be informed about the details of the implementation of its programme.
The interim minister claimed that the IMF programme was on track and there would be inflows from other multilateral institutions when the Washington-based lender’s tranche of $700 million was received.
Dr Akhtar said the interim set-up understood the pain of the industries and trying to address their complaints after listening to them. She added that an economic recovery plan had been prepared on the instructions of the interim premier.
“My job is to get the economy out of its difficult situation. A lot of work is under way to achieve this purpose. The caretaker government has been in office for only two months during which it has tried to work with full responsibility,” she continued.
The interim minister said when the caretaker set-up took over its responsibilities on August 17, everyone knew about the difficulties the country’s economy was facing.
“We tried to revive the economy very quickly and it was not an easy task. We can’t afford to waste much time, so that is why we are focusing on our work,” she continued.
Dr Akhtar promised to contact the relevant ministry about the pharmaceutical industry. She maintained that the process of economic recovery had started. “We want to speed up this process, but it will take time.”
The minister said the growth rate would be around 2% to 3%, adding that the World Bank had given a cautious estimate in this connection.
Highlighting the achievements of the interim set-up, she said for the first time in 14 months, the large-scale manufacturing and power sector had grown
“The production of cement and tractors has improved. Fertiliser sales have recovered rapidly while cotton production has increased by 80%. The loans taken by farmers have increased by 44% during July to September.”
She pointed out that the dollar had stabilised at Rs279 in the interbank. “The value of the rupee has improved by 8%.”
The minister recalled that the dollar had reached Rs305 in the interbank. She lauded the role of the law enforcement agencies by stopping the smuggling of dollars at the borders. She also said the exchange companies’ reforms had also played an important role in strengthening the rupee.Home feature 1 and Pak (national)