Dr Reza Baqir, the governor of State Bank of Pakistan (SBP) has said that the International Monetary Fund (IMF) is the government’s partner in reforming the country’s current economic system, Pakistan Today reported.
In a briefing of the Public Accounts Committee (PAC) on Tuesday, chaired by Rana Tanvir Hussain, the SBP governor said that the relationship of Pakistan and the IMF was based on common interests.
However, he assured the house that “inflation will go down and the general public will feel the relief.”
Baqir says that the SBP’s monetary policy committee had decided to keep the policy rate unchanged at 13.25 per cent. “The monetary policy committee stance is appropriate to bring inflation down to the medium-term target range of 5-7pc over the next six to eight quarters.”
Right now, reducing the interest rate would affect the people who have kept their savings in the banks. However, he admitted that higher interest rate created difficulties for the borrowers.
“The national savings rate is already very low and if the people are discouraged, then the country will have to borrow the required money from international agencies, and that will raise our current account deficit,” he further added.
“The main focus of the SBP is to maintain foreign exchange reserves in the country.”
Baqir also noted that if the foreign reserves would grow, Pakistan would not have to approach international agencies for borrowing.
The SBP governor said due to higher interest rates in the past, manufacturing had almost ended, but after reforms carried out by the incumbent government, manufacturing activities were once again on the rise despite higher policy rates.
“The present government did not take loans from the SBP due to which inflation is now being controlled. However, the state bank, at the same time, is making efforts to restore the confidence of foreign and local investors.”