By Staff Reporter
KARACHI: Pakistan’s central bank chief said on Tuesday he was confident of bringing inflation down to a medium-term target of 5-7 percent in the next two years, despite the current high rate of 29.4 percent.
Governor Jameel Ahmad also said a staff-level agreement with the International Monetary Fund (IMF) for a $3-billion, nine-month loan programme would help stabilise the markets and boost foreign exchange reserves.
“The State Bank of Pakistan’s (SBP) key goal is price stability, which is our primary responsibility. At present, the medium-term target has been set at 5-7 percent,” Ahmed said at an event to launch a new Rs75 commemorative banknote.
“This is a big challenge. Right now, when we tell people this, they end up laughing. But I assure you that we can achieve this.”
Pakistan’s inflation eased slightly in June from a record 38 percent in May, but the annual average was still at a painful 29.2 percent, forcing the SBP to keep its policy rate at a record high of 22 percent.
The governor said the IMF deal, which is subject to approval by the fund’s board in mid-July, would address Pakistan’s inflationary and external debt issues.
“As a result of this programme, we will see stability in the markets and it will have a positive impact on our foreign exchange reserves.”
He dismissed rumours of a default, saying Pakistan had made timely payments on all its external debt obligations and maintained its reserves at $4 billion.
Ahmad also said the exchange rate was determined by market forces and expected inflows from remittances and exports to improve the rupee-dollar parity.
The rupee appreciated over 5 percent against the dollar in the inter-bank market on Tuesday, as sentiment improved after the IMF deal.
The governor said the SBP’s foreign exchange reserves had increased by over $500 million and hoped for more inflows in the coming weeks.
“This would enhance our capacity of debt payment, which would have a positive impact on the market as well.”
Copyright © 2021 Independent Pakistan | All rights reserved
