Karachi, The State Bank of Pakistan (SBP) held a post-monetary policy statement briefing, emphasizing the central bank's commitment to economic stability and moderate growth forecasts. The policy rate remained unchanged at 22%, with the SBP providing detailed insights into various economic indicators and policy measures aimed at fostering sustainable growth.
According to AKD Securities Limited, the SBP Governor shared optimistic views on core inflation, which has seen a decline to an average of 18.1% in February 2024. The decrease is attributed to lower inflation rates in both goods and services sectors. Despite expectations of a rise in food inflation during Ramadan, the SBP anticipates a return to average levels soon thereafter.
The agricultural sector is highlighted as a key driver of economic growth, with satisfactory performance in the Kharif crop season and a positive outlook for the Rabi harvest. The SBP also reported significant improvements in its external buffers and reserve quality, noting a reduction in forward swap liabilities.
On the fiscal front, Pakistan achieved a primary surplus of 1.7% of GDP in the first half of FY24, surpassing the full-year target. The central bank's open market operations have been instrumental in managing liquidity, although reduced dependency is expected due to better revenue collections and deposit growth.
The briefing also addressed Pakistan's external repayment obligations, outlining successful repayments and rollovers that have reduced the net-repayable amount significantly. The SBP's focus on digitalizing the economy and enhancing the use of 'Raast' for digital payments aligns with its Vision 2028 strategy.
As discussions with the IMF progress, the SBP targets to bolster its foreign exchange reserves in compliance with the program's requirements, aiming for a reserve level of US$9.1 billion by June 2024. These measures collectively signal the central bank's proactive approach to ensuring economic stability and fostering an environment conducive to sustainable growth.