Apropos SBP's Quarterly Report released on March 28, 2014, it is heartening to note that macroeconomic indicators are showing improvement. According to the report, there is a 'perceptible' improvement in the country's economy. Inflationary pressures have softened (post-November); pressure on FX reserves and the PKR parity has eased in December 2013; LSM is showing improvement, which is supported by an increase in credit to the private sector; and as reported by the Ministry of Finance, the fiscal deficit as a percent of GDP declined in first half of FY14.
The report also says that improvement in the fiscal and external accounts in the second half of FY14 depends on the expected proceeds from the auction for 3G licenses and Coalition Support Fund (CSF) inflows. However, if expected official external inflows are realised in second half of FY14, SBP's FX reserves are likely to exceed its initial projection for the full year.
It is interesting to note that the report has traced the recent comfort on the external side to an unanticipated US $1.5 billion inflow into SBP's reserves, which may have triggered market expectations that Pakistan may receive a facility to defer oil payments in QY-FY14. The question, however, is why the central bank has not named the country that has helped build up its reserves. Why is SBP reluctant to disclose the anonymity of source from where Pakistan is expected to receive a facility to defer oil payments?
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