First time forex rates movement is both ways: SBP Governor

KARACHI: Since June 2019, Pakistan has transitioned to a market-based exchange rate regime generating for the first time an orderly two-way movement of exchange rates, which has led to a significant shrinking of the current account deficit and better fundamentals facilitated capital inflows, says Governor State Bank of Pakistan, Dr. Reza Baqir.

He was sharing the overview of the current economic outlook of Pakistan at an interactive session with leading foreign investors and members of Overseas Investors Chamber of Commerce and Industry here on Tuesday.

He informed the investors that fiscal deficit narrowed to 3.8 percent of Gross Domestic Product over the period of nine moths (July 2019 to March 2020) with current account balance in surplus for the first time since 2016.

Dr. Reza Baqir said a year ago, 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 economic growth of the country.

He also shared that overall Rs. 1.73 trillion or 4.1pc of the GDP of the country was injected by SBP in the economy to support individuals and businesses during COVID-19 through various proactive measures including dramatic reduction in interest rates from 13.25pc to 7pc, loan deferment, employment support and Rozgar Schemes.

He said SBP was taking appropriate and timely actions to address the ever-changing economic environment.

President OICCI, Haroon Rashid highlighted the significant economic contribution of foreign investors at OICCI, who are among the largest economic stakeholders and had invested over dollars 16 billion in the past eight years and continue to have a positive view of the opportunities for investment despite the on-going challenging economic environment in the country.

He apprised SBP Governor of the key concerns of OICCI members including delays in approval of forex payments and cumbersome documentation requirements and sought his support in the light of SBP policy to facilitate foreign direct investment through improving the ease of doing business in Pakistan.

Dr. Reza Baqir appreciated the contribution of OICCI members to the national exchequer and encouraged all members to figure out ways to increase exports and adopt import substitution practices, as it was a critical step towards moving the country out of poverty.

“SBP is moving towards digitalization of payment processes and proactive engagement that will address the major issues systematically and facilitate the business community,” informed the Governor.

Dr. Reza Baqir also mentioned that through an online case look-up portal, it was now possible for companies to monitor the progress of their respective cases submitted to SBP with increased transparency.

He agreed on the need for continuous dialogue with the OICCI members and invited the OICCI members to meet the SBP leadership at regular intervals for timely resolution of their issues.

OICCI President said his chamber's members appreciated the SBP's efforts towards continuous improvement in the economy and presented a comprehensive list of recommendations for ensuring the ease of doing business in the country.