Savings, investments must get a boost: Current IMF package may be last: SBP chief

State Bank of Pakistan (SBP) Governor Dr Reza Baqir Monday said the country's current IMF program would likely to be the last bailout package if domestic savings and private sector investments are increased besides foreign exchange reserves stabilized.
Dr Baqir spoke to the students of the Institute of Business Administration (IBA) on the topic of 'Pakistan economy: Macroeconomics Challenges and Outlook' at the institute's main campus here.
For economic stability, he said, increase in savings and investment rate is pivotal, adding that the government has brought stability through adjustments in exchange and policy rates.
He said export of goods and services needs to be made competitive in international market to bring economic stability in the country.
Dr Baqir was of the view that role of public sector is critical to promote competition, urging the Competition Commission of Pakistan (CCP) to create a level playing field for new business ventures in Pakistan.
"Opening up new markets and removing barriers would help new business ventures to flourish and grow," Dr Baqir said.
"I am impressed by the talent of the country's young entrepreneurs," he added. The governor SBP urged the need for working on the 'ease of doing business' in order to attract private investments in the country.
Talking on fiscal deficit, Dr Baqir said the government has taken significant fiscal measures such as reducing primary deficit to 1.2 percent of GDP. He said the government has taken several tax measures including no change in sales tax rate, broadening of income tax base and reducing expenditures.
He said the government desires to bring people into the tax net, adding that sustainable economy needs broadening of tax base.
"Freeze on defense budget is also part of government's move to plug the fiscal gap." On increase in interest rates, he said the policy rate would be adjusted upon the projection of inflation rate.
"Increase in policy rate slows down the economic activity but, in past, when the policy rate was reduced the response of private sector was not so positive," the governor SBP said.
He said the SBP has changed the exchange rate system from fixed market driven to bring a rationale into the economy.
"We have the market-based exchange rate system like other markets in the world," he added. With reduction in liabilities, he said the government is focusing on net international reserves.
The governor SBP said the government is working on digitalized financial system that would help improve national savings.