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January 24, 2021

Stabilising the system

Editorial

 
January 24, 2021

The State Bank of Pakistan's head Reza Baqir has said that the prime aim for the future is to stabilise the economy and by doing so, to build confidence in it. Commenting to questions on Geo News, he said that the interest rate would be held stable at around seven percent so that no confusion is created in the business sector, or other sectors of the economy. He also said the to and fro in the interest rate that had been seen in the past would be curbed. Apart from this, Baqer spoke of digitalising the economy and the benefits this would bring, of remittances coming in – which he believes will not stop after the Covid-19 pandemic is over – and the Hundi/Hawala system resumed to some degree and also of the issue of transparency in foreign exchange collected by the bank, saying that this is quite visible, when the forex account reserves are seen and that the State Bank is not buying money from the open market, but has still managed to keep the dollar steady, especially when compared to other developing economies.

This of course, is excellent news. More than anything else, we need a stable regular economy, which can function and keep the needs of people in mind. We also need to improve exports and other sectors to bring in reserves and build up the big deficit, which still remains as a gap in our economy. Whether the State Bank can achieve this depends on the confidence of the people and particularly the business community in its working and the extent to which it manages to keep the promises it has made so far. While Baqer spoke of making the opening of an account especially easy for overseas Pakistanis, he did not mention the new banking travails that Pakistanis have to face at home. Opening an account or even recovering other banking information has become more complicated because of regulations imposed by the State Bank on FATF demands to make sure the economy and the remittances coming into banks are openly monitored.

While at the state level, this is obviously a welcome step, for the ordinary bank customer, with perhaps a few thousand in his or her account, the nuisances can be endless. They mean digital verification, many times over, the filling in of multiple forms and visits again and again to the bank before all the formalities can be met. It's also now far harder than ever before, to open an account. These are factors the State Bank should also look into, just as it looks into the issue of domestic debt and how it should work to minimise this so that the economy can continue to grow and bring benefits to the country in a sector that must be put right if Pakistan is to catch up with the rest of the developing world.