As anticipated State Bank of Pakistan (SBP) held its main policy rate at 13.25 per cent on 16th September monetary policy decision taking a pause from a series of hikes as expectations have arisen from their angle for a stabilization of inflation rate.
The bank last lifted rates in July by 100 basis points, its ninth cut since the start of 2018, as it faced rising inflation, a substantial current account deficit and downward pressure on the rupee.
The decision comes at a time of scrutiny on the same day i.e. 16th September 2019 when a team arrived from IMF is going to review progress on reforms agreed as part of a bailout package in July.
The International Monetary Fund’s team headed by its Director Jihad Azour has said on arrival that the $6 billion IMF loan program had been structured by the Pakistani government itself and its targets cannot be revised after the lapse of a mere three months.
State Bank has set the target range of 5 – 7% for the inflation over the next twenty four months. But practically it looks difficult as nobody knows what is going to happen by accident like an attack on Aramco Saudi Arabia. Oil prices have thereafter risen and would affect oil prices in Pakistan most probably from October this year.
The Monetary policy committee noted two key developments since its last meeting that influenced its decision.
“First, the interbank foreign exchange market had adjusted relatively well to the introduction of the market-based exchange rate system and current the rupee had strengthened modestly against the US dollar since the last MPC, unlike its previous trend.
“Second, on the external front, the US Fed, as anticipated, reduced its policy rate by 25 basis points (bps), followed by policy rate cuts by other major central banks around the world. This would help in lowering pressures on emerging markets’ currencies and potentially increase financial inflows.”
But apart from SBP and Government, Public is crying for the increase in prices of daily needed goods. As per their experience the prices never go down with the passage of time. The people are least concerned with figures and dynamics of economic policies; they want immediate actions to make their life bearable.
If we look in to the real facts every economist would say that Pakistan is required to pursue reforms to improve its entrepreneurial environment and facilitate private-sector development.. But why this did or does not happen. Current Government with its IMF imported ministers and institutional heads are answering that it is happening due to past governments. But people are aware that in previous governments PKR was better with less reliance on public debt. Inflation was down with GDP growth reaching to 5.8% in 2018 whereas now it is at 3.3%.
Now overall progress lags significantly behind other countries in the region. The tax system is complex and inefficient. Still reliance on indirect tax remains the main feature of tax collection.
Number of active tax payers/filers may reach above 1 million this year. Taxation in Pakistan is a complex system of more than 70 unique taxes administered by at least 37 agencies of the Government of Pakistan with no legislation for Services, Agriculture, Wholesale, Retail sectors to bring them in to tax net.
By going in to data of macro indicators obtained from the SBP one can easily visualize that 2020 is not going to be good for the people of Pakistan in spite of government’s rhetoric’s and its regulators claims.
So what needs to be done? Targeting GDP growth above 6%, with inflation below 6-7%, fiscal and current account deficits ranging around 4% of GDP, tax collection above 15% and public debt around 60-65% of GDP, macro and micro economic policies are required. For that immense structural reforms with lot of legislations are basics for moving forward.
But for that government would have to compromise to bring unity in political and security arenas in the country so as to give some direction to the economy.
Comparison of KEY macro indicators | ||
FY 2018 | FY 2019 | |
GDP growth in % | 5.8 | 3.3 |
Investment as % of GDP | 16.7 | 15.4 |
Savings as % of GDP | 10.4 | 10.8 |
Inflation growth in % YOY | 10.5 (Aug 19) | 6.2 (Aug 18) |
Current account balancs $ in billions | -19.8 | -13.5 |
Trade balance$ in billions | -31.9 | -28.3 |
FDI as % of GDP | 1.1 | 0.6 |
Foreign remittances $ in billions | 19.9 | 21.8 |
Total Revenue Rs in billions | 5,228 | 4,901 |
Total Expenditure Rs in billions | 7,488 | 8,346 |
Fiscal deficit in % of GDP | -6.5 | -8.5 |
Total External Debt $ in billions (end June) | 95.2 | 106.3 |
Total Domestic Debt Rs in billions (end June) | 16,416 | 20,730 |
Credit to Private sector (End June 2019 stock Rs6,666 billion) | Change July 18 (Rs -18 Billion) | Change July 2019 (Rs -91.3 billion) |
Performance OF Stock Market 100 index | 41,911 | 30,245 (Sept 19) |
PKR against US$ | 120 | 156 |
SBP policy rate | 7.50 | 13.25 |
Hi, I do believe this is an excellent website. I stumbledupon it 😉 I’m going to return once again since I book-marked it. Money and freedom is the best way to change, may you be rich and continue to help other people.
Lucky Jet – это не только игра, но и шанс на победу! Зайдите на luckyjet 1 win, чтобы начать свой полет к успеху.
Heya i’m for the primary time here. I came across this board and I in finding It truly useful & it helped me out a lot. I hope to offer something back and help others like you helped me.
Hello! Someone in my Myspace group shared this site with us so I came to give it a look. I’m definitely enjoying the information. I’m book-marking and will be tweeting this to my followers! Fantastic blog and brilliant style and design.
I like it when people come together and share opinions. Great website, keep it up!
Hey there exceptional blog! Does running a blog similar to this take a lot of work? I have very little expertise in computer programming but I was hoping to start my own blog soon. Anyways, if you have any suggestions or tips for new blog owners please share. I know this is off topic but I just needed to ask. Appreciate it!
There is definately a lot to know about this topic. I like all the points you’ve made.
If some one wants to be updated with most recent technologies afterward he must be pay a visit this web site and be up to date every day.
It’s really a nice and helpful piece of information. I’m glad that you simply shared this helpful info with us. Please stay us informed like this. Thank you for sharing.
We stumbled over here different web page and thought I might check things out. I like what I see so now i’m following you. Look forward to checking out your web page yet again.
I have read so many articles regarding the blogger lovers but this piece of writing is actually a pleasant post, keep it up.
Does your site have a contact page? I’m having a tough time locating it but, I’d like to send you an e-mail. I’ve got some recommendations for your blog you might be interested in hearing. Either way, great site and I look forward to seeing it improve over time.
Good post. I’m going through a few of these issues as well..
Nice post. I learn something new and challenging on sites I stumbleupon everyday. It will always be interesting to read content from other writers and practice a little something from their sites.
I’m really enjoying the design and layout of your site. It’s a very easy on the eyes which makes it much more enjoyable for me to come here and visit more often. Did you hire out a designer to create your theme? Excellent work!
It is perfect time to make a few plans for the longer term and it is time to be happy. I have read this submit and if I may I wish to suggest you few fascinating things or suggestions. Perhaps you could write next articles relating to this article. I want to read more things approximately it!
What’s up mates, pleasant piece of writing and pleasant arguments commented here, I am actually enjoying by these.
I have been surfing online more than three hours nowadays, yet I never found any interesting article like yours. It’s pretty value enough for me. In my opinion, if all website owners and bloggers made good content as you did, the net might be much more useful than ever before.
Pretty nice post. I just stumbled upon your blog and wanted to say that I have really enjoyed browsing your blog posts. In any case I’ll be subscribing to your feed and I hope you write again soon!
Howdy! Do you know if they make any plugins to help with SEO? I’m trying to get my blog to rank for some targeted keywords but I’m not seeing very good gains. If you know of any please share. Thank you!
Wonderful beat ! I wish to apprentice while you amend your site, how can i subscribe for a blog site? The account aided me a acceptable deal. I had been tiny bit acquainted of this your broadcast provided bright clear concept