State Bank says committed to transparency in disclosures

KARACHI: The State Bank of Pakistan (SBP) maintains the highest degree of transparency in its disclosures and full independence in its views on the state of the economy, it said on Saturday.

The disclosures have confidence of the public and reports are considered as authentic and credible, the SBP said in a rebuttal to a comment published in The News on November 20.

“State Bank of Pakistan strongly condemns the views expressed by the commentator,” the SBP said in a statement.

The SBP rejected allegations against the SBP governor that he was spinning the facts to portray a rosy picture of the economy.

“These allegations are false, baseless and an attempt to make the position of governor controversial,” it said. “The maligning of the governor undermines the position of head of an independent and premier institution of the country in the minds of innocent readers of the newspaper, with potentially far-reaching negative consequences for trust in the central bank.”

The SBP also rejected the criticism about the progress made by the economy during pre-COVID-19 pandemic period.

“The author argues that the recovery of the economy in the pre-COVID-19 period is not true and that the budget deficit was out of control,” it said.

“The fact is the fiscal deficit for the period July-March FY20 was only 3.8 percent of the GDP showing a remarkable improvement in comparison with the fiscal deficit of 5 percent during July-March FY19.”

The SBP further said the primary balance during the same period was in surplus of 0.4 percent of GDP, for the first time since FY16. Similarly, assertions about the reduction of the policy rate by 625 basis points during COVID-19 that has been widely admired by all stakeholders, particularly businesses, and its unwarranted comparison with other countries reflect the ignorance.”

The State Bank said it has provided a detailed analysis of the developments during FY2020 in its latest annual report on the state of the Pakistan’s economy, “which makes it amply clear what happened in the pre and post COVID-19 periods”.

“According to the report, following difficult but necessary stabilisation efforts during the first nine months of the fiscal year, Pakistan’s economy was well on course for a steady recovery on the eve of the Covid-19 pandemic,” it said.

“By February 2020, the unprecedented balance of payments crisis created by the unsustainable macroeconomic policies of previous years had been forcefully addressed through sizable reductions in the twin fiscal and current account deficits. Following a round of monetary tightening during FY19, core inflation remained relatively stable, notwithstanding an uptick in headline inflation due to one-off and seasonal factors. In turn, this hard-won stabilisation was beginning to lead to the revival of economic activity and the restoration of business and consumer confidence.”