In the midst of intense pressure on foreign currency reserves, Pakistan will soon close its $4 billion shortfall in external finance with the assistance of friendly nations under IMF conditions, according to Acting Governor of the State Bank of Pakistan (SBP) Dr Murtaza Syed.
He also acknowledged that inflation will continue to be higher for the ensuing 11 to 12 months, which is why the central bank was aiming for an average inflation target of 18 to 20 per cent for the current fiscal year 2022–2023
According to The News, acting SBP Governor Dr. Murtaza Syed stated that Pakistan has already met its gross external financing requirements of $34 to $35 billion.
However, Islamabad is also attempting to secure confirmation of $4 billion in inflows from friendly nations like Saudi Arabia, the UAE, and Qatar. According to him, these extra dollar inflows will be used to boost foreign currency reserves and build a safety net in case of a crisis-like circumstance.
He resisted providing a specific timeline but assured that the $4 billion finance deficit will be closed quickly. He argued that urgent attempts were being made by the government and IMF high-ups to secure confirmation from their respective nations.
Denying that the scenario was similar to Sri Lanka, he praised Bangladesh and claimed that nation performed properly, chose to return to the IMF, and also increased utility costs while maintaining enough levels of foreign exchange reserves.
Speaking of increasing inflation, he believed that supply interruptions abroad had set the way for a global super cycle of commodities, leaving Pakistan with no choice but to concentrate on agriculture productivity in order to secure food security.
According to Murtaza Syed, people would have to deal with this challenging moment because there is no immediate magic wand to manage increased inflation. He said that while it is a challenging time, there is no alternative way to prevent the country from entering a more challenging situation if nothing was done.
According to the official, the SBP has loosened the cash margin requirements for opening L/Cs for imports and offers incentives to individuals who do so. According to him, the IMF opposed trade restrictions and took action to prevent the depletion of foreign exchange reserves.
The current pressure on foreign reserves is now anticipated to end within the next two months. He also promoted energy saving as a way to ease the burden of high import costs.
The senior official believed that as long as the economy’s structural issues persisted, Pakistan will continue to see boom and bust cycles. He gave a recent example in which the nation’s GDP increased by 6 per cent, indicating that the overheating of the economy led to imbalances known as the budget deficit and current account deficit. Although a recession is not imminent, he continued, the economy must be managed carefully.
