Although, Pakistan's economy is gradually improving, it requires at least 6 percent GDP growth to accommodate population growth and create new job opportunities, said Ashraf Mehmood Wathra, governor State Bank of Pakistan (SBP). Addressing a press conference on monetary policy here on Saturday, he said there is no confusion on GDP growth rate.
Pakistan has achieved 4.1 percent GDP growth during the last fiscal year (FY14) and a Letter of Intent (LoI) to the IMF was signed before the final GDP statistics, he added. "GDP growth of 3.3 percent was IMF's projection and accordingly was mentioned in the LoI as till that time no official statistics were released," he said. He said that another review of Pakistan economy will be conducted by the IMF from August 6 to 16, 2014 and all matters like GDP growth will be discussed in that meeting.
Replying a question, he said that Pakistan's economy during the last one year has performed well and GDP rate has improved. Country's economy has grown by some 4.1 percent in FY14, which is much better than previous years. However, he said that the GDP growth rate is still lower than the potential of Pakistan's economy and least 6 percent GDP growth is required to accommodate population growth and create new job opportunities.
He said that the Middle East unrest may hurt the economy in short term and SBP has already taken measurers to tackle this issue. The governor said agricultural sector growth is not comfortable for the last couple of years due to several reasons. Therefore, the federal government and SBP are focusing on agriculture sector and a target of Rs 500 billion has been set for agricultural credit disbursement for FY15 to achieve a better growth.
He said that as per the SBP Act, Monetary Policy will be decided by the central board of directors of SBP and it is doing it in a proper and transparent manner. In order to bring a further clarity, the minutes of monetary policy proceedings of Board's meeting will be publish in the next four weeks, he added.
Replying a question regarding currency swap, Muhammad Ali Malik, director DMMD SBP, said that Pakistan has signed two currency swap agreements with China and Turkey and accordingly banks have been asked to avail this facility. Although, so far no bank has requested for the facility but it has multiple benefits and will support the balance of payment (BoP).
Talking about the investment in the Pakistan Investment Bonds (PIBs) at higher rates he said that the government has decided to shift its borrowing from short-term to long term and it's a good decision that will reduce the retirement period. Now the government will not be required to retire the borrowing by end of each quarter, he added. Riaz Raizuddin Chief Economist SBP, said that textile reforms, higher exports and remittances are necessary for an improved economy.
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