SBP chief hails Moody's report on upgradation of outlook

State Bank of Pakistan (SBP) Governor Dr. Reza Baqir Tuesday welcomed the Moody's report on upgradation of outlook from negative to stable.

Commenting on the Moody's report, in a statement issued here, Baqir said that this positive development reflects the recognition of tough decisions taken by the policymakers in recent months. The measures culminated in the change in the exchange rate regime to a market-based system since May 2019, he added.

"These steps have made our exports competitive, curbed expensive imports and provided incentives to domestic industries.

All this has resulted in a sustained improvement in the current account which has been the key factor for increase in SBP's reserves net of liabilities," he added.

Baqir said that stock market boost is a reflection of improved market sentiment and a growing reflection that the country's finances are on a sustainable path.

The Governor SBP also emphasized that while such market developments are welcome, it is critical to ensure that the emerging financial improvement is translated into real gains for the middle and lower income classes.

Baqir said that these sections of society have borne the brunt of adjustments from higher income taxes deducted at source for salaried workers, higher indirect taxes, and higher inflation. Rising inflation has partly been the result of need to restore competitiveness in the exchange rate, increased administered prices to reduce fiscal deficits in the public sector and unforeseen food supply disruptions.

"The structural constraints on private investment, as reflected in ease-of-doing business indicators, have to be addressed further to stimulate private job creation and eventually raise incomes," he added.

Moreover, Baqir said it is equally important to address food supply disruptions and curtail hoarding in food markets to bring down edibles' prices. The Governor SBP also emphasized that coordinated work in these areas is critical to ensure that the strengthening market sentiment translates into improving the livelihood of people, particularly in the middle and lower income brackets.