KARACHI: The State Bank of Pakistan will announce the new monetary policy for the next two months on Monday (tomorrow).
According to the SBP sources, the Monetary Policy Committee would convene in Karachi to assess economic statistics before deciding whether to raise or lower interest rates.
The State Bank’s current policy rate is 22 per cent.
Earlier on Saturday, Interim Finance Minister Dr. Shamshad Akhtar stated that the only way to rectify the country’s economic situation, given the fiscal imbalance resulting from the widening gap between revenue and expenditure, is by adjusting the key interest rate.
She made these remarks during an event organized by the Korangi Association of Trade and Industry (KATI) in Karachi. Dr. Akhtar explained that when the fiscal account is unbalanced and the current account deficit is substantial, the monetary rate becomes the tool to address the situation.
She noted that the effects of this strategy were evident in the form of an improvement in the current account. Although she acknowledged that the current interim government had not entirely eliminated or controlled inflation, she claimed that inflation was on a downward trend.
Dr. Akhtar affirmed that the World Bank and International Monetary Fund (IMF) programs were being implemented effectively. She also mentioned an upcoming visit by an IMF delegation to Pakistan on November 2, during which they would be briefed on the progress in implementing the IMF program.
The interim minister assured that the IMF program was on track, and once the $700 million tranche from the IMF was received, there would be inflows from other multilateral institutions.
Dr. Akhtar stressed that the interim government understood the challenges faced by industries and was actively working to address their concerns after engaging with them. She mentioned that an economic recovery plan had been developed at the direction of the interim Prime Minister.
She emphasized her responsibility to guide the economy out of its challenging state, noting the significant efforts underway for this purpose within the two-month tenure of the caretaker government.
The interim minister highlighted the urgency of their work, as the state of the economy was already in a difficult condition when the interim government assumed its responsibilities on August 17.
Dr. Akhtar pledged to liaise with the relevant ministry regarding the pharmaceutical industry and stated that the process of economic recovery had already commenced, with plans to accelerate it, although this would take time.
Regarding economic growth, she projected a rate of around 2% to 3%, with a cautious estimate provided by the World Bank.
She also pointed out several achievements during the interim government’s term, including growth in large-scale manufacturing and the power sector, improved production in industries like cement and tractors, rapid recovery in fertilizer sales, and an 80% increase in cotton production. Loans taken by farmers had also increased by 44% from July to September.
Dr. Akhtar noted that the exchange rate had stabilized at Rs279 in the interbank market, representing an 8% improvement in the value of the rupee from its earlier level of Rs305. She commended the role of law enforcement agencies in curbing dollar smuggling at the borders and recognized the reforms in exchange companies as significant factors contributing to the strengthening of the rupee.
