By Staff Reporter
ISLAMABAD: Finance Minister Muhammad Aurangzeb said on Friday that the government’s rejection of all bids for treasury bills aimed to convey its ability to borrow on its own terms, as he urged banks to focus on lending to the private sector.
“The government is under no desperation to borrow, and if it were to borrow, it would do so on its own terms,” Aurangzeb told a meeting of the Economic Coordination Committee (ECC) of the cabinet.
The minister stated that a 450 basis points accumulated rate cut will reduce debt servicing costs and encourage banks to lend to the private sector.
“…the resultant ease in borrowing would help the government reduce its single largest expenditure of debt servicing and create room for the banking sector to step up and lend aggressively to the private sector.”
Pakistan’s economy has shown signs of stability, with foreign exchange reserves at a 26-month high driven by strong remittances flows and IT exports stabilizing at around $300 million per month.
The country has also seen steady growth in RDA inflows, with $165 million received last month and a current account surplus of $75 million achieved in August.
Inflation, which peaked at 38 percent in May 2023, has decreased to single-digit levels and is expected to decline further in September.
The minister said macroeconomic stability “was not an end itself but a means to an end and its the basic hygiene and the building blocks that provide foundation to the whole edifice”.
“We would move in the right direction on the basis of this approach, and ensure gradual stability in the micro sectors as well.”
Pakistan is scheduled to receive an update on its $7 billion IMF loan program on Sept. 25, and Aurangzeb expressed optimism about the outcome.
“With the prayers of the nation and efforts made by the Prime Minister in association with bilateral partners, our local teams, administration, and all our institutions, we will hear good news on the 25th and move forward from there,” the minister added.
Later, during the meeting, the ECC approved the export of 40,000 tons of sugar to Tajikistan and an additional 100,000 tons of surplus sugar.
The ECC also directed the Ministry of Industries and Production to finalize the sale agreement with the Tajik entity and bring it back for approval.
“The meeting was told that the price of sugar, as per PBS data, has shown a downward trend since July, while sufficient stocks of sugar are available to meet domestic requirements up to January next year,” a statement said. “After detailed discussions and deliberations, the ECC approved the export in line with the terms and conditions already decided by the ECC in its meeting on 13 June 2024.”
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