Governor State Bank of Pakistan Tariq Bajwa said on Wednesday that US President, Donald Trump's statement against Pakistan would not affect the economy. While talking to journalists at Federation House Karachi, he said that Trump's statement was a part of foreign policy and Pakistan's foreign department has replied accordingly in a good manner. He said that there is need of amnesty scheme to bring back the billions of dollar capital shifted abroad during the previous years.
Earlier, speaking at an interactive session with the business community at federation house, governor SBP said that current account deficit is challenging to the economy due to higher imports, however, on positive note major increase has been witnessed in the import of capital goods. "There is 32 percent increase in the import of capital goods that was very good sign for the economic growth of the country", he added.
Replying a question on banking channel with Iran, he said State Bank is actively engaged with Iranian authorities for restoration of banking channel between the two countries. SBP on its part has completed regulations and now Central Bank of Iran has been asked to develop the same. After the development of regulation by Central Bank of Iran, SBP will nominate two banks for banking transactions with Iran, he mentioned.
"As all major issues have been resolved and now the economy is moving in the right direction", he added that there were three major challenges to the economy which included poor law and order situation, energy crisis and availability of credit. Now these issues have been resolved to great extent, and interest rate is at lowest level, providing new credit opportunities to the private sector, he said.
He said that with lower interest rate availability of credit to private sector has shown quantum jump over last year, however, there is need to facilitate the Small and Medium Enterprises (SMEs), which can contribute largely in economic growth.
"During the last fiscal year Pakistan achieved 5.3 percent economic growth, which was the highest in last decade. This year a target of 6 percent has been set and all international financial institutions World Bank, International Monetary Fund and Asian Development Bank are estimating some 5 to 5.8 percent GDP growth, which is close to set target", governor SBP said. He said that international financial institutions are of the view that Pakistan was understating its economic growth, whereas India was overstating.
Governor SBP said that economy based on sentiments and there is need to create positive sentiments for long term and stable growth. "We need to highlight the positive prospect of Pakistan on international front to attract the foreign investment", he added. He informed that with positive policies, the inflation rate has been brought down to 4 percent and discount is also at historical lowest level.
Bajwa also emphasized for promotion of SME sector, housing and agricultural sector as he believed that these sectors can contribute largely in economic growth. "There is need to focus on SMEs which were facing many problems including less credit by the banks. Presently credit to SME sector stood at seven percent of the total credit given to different sectors as against 17 previously. Now we are making efforts to bring the credit disbursement to SMEs sector up to 20 percent", he added.
Talking about the agri sector he said that there is need to strengthen agriculture through modernization and credit disbursement for higher economic growth in the country. This year SBP has set a tentative target of Rs 1001 billion agricultural credit disbursement for this fiscal year, he informed.
Bajwa said that Balochistan is also much behind in credit utilization that led to low economic activity. He informed that Balochistan's share in overall deposits is about 2 percent, while credit disbursement is about 0.2 percent. A package for Balochistan will be announced soon.
Governor SBP also emphasized the banks for higher lending to the construction sector and said that real estate sector does not provide support to the economy but housing sector can provide. He said that some 50-60 other industries are linked with housing sector. Presently, there is a massive gap in demand and supply of houses, therefore banks have been asked to increase lending to construction and housing sector.
SBP Governor affirmed that there were many challenges to our economy but these could be met through joint efforts of the government and private sector. "Stability and growth were two pillars of an economy. We have identified the areas of growth. Before becoming industrial economy, we must be a services economy", he added.
Bajwa said that role of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) for promoting trade and industry is commendable. SBP is also working for the same. He also emphasized on strong coordination between SBP, and FPCCI for the promotion of trade and industry in the country.
Governor SBP said that he along with a team of top SBP officers would visit other major chambers of the country including Quetta Chamber so that coordinated and practical policies could be made for high economic growth. Earlier, president FPCCI Zubair Tufail, chairman FPCCI Standing Committee on Banking and Finance Dr Mirza Ikhtiar Baig apprised the Governor SBP of the issues relating to the Central Bank and other banks being faced by trade and industry in the country.
On the occasion, Deputy Governor SBP Jamil Ahmed, Hanif Ghuhar Mirza Ishtiaq Baig, Irfan Sarwana, Al-Haj Dhani Bakhsh Memon, Mumtaz Ali Shaikh and Akbar Abdullah, Presidents of commercial banks and others were also present.
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