Since June 2019, Pakistan has transitioned to a market-based exchange rate regime, resulting for the first time ever in an orderly two-way movement of exchange rates in the country, said Governor State Bank of Pakistan (SBP), Dr. Reza Baqir during an interactive session with leading foreign investors and members of the Overseas Investors Chamber of Commerce and Industry (OICCI).
He also said that this has led to a significant shrinking of the current account deficit and better fundamentals facilitated capital inflows.
The SBP Governor shared an overview of the current economic outlook of Pakistan, saying that the fiscal deficit narrowed to 3.8 percent of GDP in July-March FY20 with the current account balance in surplus for the first time since 2016.
Dr. Raza Baqir stated, “A year ago the SBP was being perceived as inflicting tough stabilization measures after Pakistan had successfully started an economic reform program to address external and fiscal imbalances and later after the onset of COVID-19 the government and central bank gave a timely and calibrated economic response without compromising buffers and as a result today the focus is on the economic growth of the country”.
During the session, the SBP Governor said, “Overall, Rs. 1.73 trillion or 4.1 percent of the GDP of Pakistan was injected by the SBP in the economy to support individuals and businesses during COVID-19 through various proactive measures”.
Elaborating on these measures, he mentioned a dramatic reduction in interest rates from 13.25 percent to 7 percent, loan deferment, employment support and Rozgar Schemes. He said that SBP is taking appropriate and timely actions to address the ever-changing economic environment.
OICCI President Haroon Rashid highlighted the significant economic contribution of foreign investors at OICCI, who have invested over $16 billion in the past eight years and continue to have a positive view of the opportunities for investment despite the ongoing challenges within the economic environment of the country.
OICCI shared some key concerns of OICCI members with Dr Reza Baqir such as, delays in approval of forex payments and cumbersome documentation requirements. OICCI also sought the Governor’s support in light of the SBP policy to facilitate FDI through improving Ease of Doing Business in Pakistan.
While appreciating the contribution of OICCI members to the national exchequer, Dr. Baqir encouraged all members to figure out ways to increase exports and adopt import substitution practices. He said, “The SBP is moving towards digitalization of payment processes and proactive engagement that will address the major issues systematically and facilitate the business community”.
The SBP Governor also mentioned that through an online case lookup portal, it is now possible for companies to monitor the progress of their respective cases submitted to SBP with increased transparency.
The OICCI members presented their recommendations for improving the Ease of Doing Business in Pakistan. Dr. Raza Baqir invited OICCI members to meet SBP leadership at regular intervals for the timely resolution of their issues.