Governor State Bank of Pakistan (SBP), Mr Jameel Ahmad, met key international investors during events organized by global banks, including Barclays, JP Morgan, Standard Bank, and Jefferies on the sidelines of the IMF-World Bank meetings in Marrakech, Morocco. Governor SBP briefed the investors about the recent macroeconomic developments, policy responses to current challenges, and the outlook of Pakistan’s economy, and also answered their questions.
The Governor informed the investors that the current policy mix adopted by the Government and the Central Bank is geared towards achieving stabilization through addressing macroeconomic imbalances. He apprised that the SBP is among the first central banks that began to tighten monetary policy in the wake of the rising inflation globally. However, certain domestic challenges, most notably the unprecedented floods in the beginning of the previous fiscal year, complicated SBP’s efforts to bring down inflation. On a cumulative basis, SBP has increased the policy rate by 1500 bps over the last two years. Likewise, the government has also stepped up its fiscal consolidation efforts.
Mr Ahmad said that the stabilization measures have started yielding results. Inflation has come down to 31.4 percent in September 2023 after peaking at 38.0 percent in May 2023 and is expected to continue its downward trajectory over the coming months, whereas the external account has improved considerably and foreign exchange buffers are being built up. Governor SBP shared that with the policy rate at 22 percent, the SBP assesses the real interest rates turning substantially positive on a forward-looking basis, as inflation is expected to come down significantly during the second half of this fiscal year. Going forward, the Stand-By arrangement with the IMF is expected to support the ongoing policy efforts to stabilize the economy. In his remarks, the Governor SBP emphasized that emerging economies are faced with multiple challenges, such as access to capital markets, growing anti-trade sentiments, debt sustainability, and building climate-resilient and inclusive economies and there is a need for multilateral institutions like the IMF and World Bank to take the lead role in shoring up global buy-in to address these challenges. For Pakistan’s part, the country is on-track to address the longstanding structural weaknesses, and with the support from its multilateral and bilateral partners, it would be able to achieve sustainable and inclusive economic growth over the medium term. https://shorturl.at/ahkRS
Source: IBP