SBP’s Baqir confident inflation, CAD to come under control soon

KARACHI: Governor State Bank of Pakistan (SBP), Dr Reza Baqir, trusts that towering inflation and ballooning current account deficit (CAD) will be tamed down the line, owing to a number of countermeasures executed by the country’s economic and financial institutions lately.

Baqir said this while speaking at an interactive session titled ‘Roshan Digital Account – An Initiative of State Bank of Pakistan’ organised by the Embassy of Pakistan in Riyadh on Sunday. “Discussing the economic outlook, he termed inflation and managing the current account deficit as two big challenges and expressed confidence the country would bravely weather the aforesaid challenges in future, as a result of the forceful and timely actions to moderate domestic demand taken by the government and the State Bank of Pakistan in the last few months,” the governor said in his keynote address.

Moving forward, Baqir expressed his gratitude to the Pakistani diaspora in the Kingdom of Saudi Arabia (KSA) for their tremendous support to Roshan Digital Account (RDA) initiative, according to a joint statement issued by the SBP and Embassy of Pakistan in Saudi Arabia. “The RDA has proved to be a great success among the Pakistani community in KSA, who have opened the highest number of RDA accounts and sent the second highest amount of deposits among the 175 countries from which Overseas Pakistanis have participated in RDA,” the SBP governor said. The event was attended by a large number of Pakistanis residing in the Kingdom, various KSA based Pakistani associations, senior State Bank of Pakistan (SBP) management, and officials from the Embassy of Pakistan.

“This landmark initiative provides an opportunity for overseas Pakistanis to open a bank account and meet their saving and investment needs in Pakistan through a fully digital process,” he said.

He informed the audience that since the launch of the scheme last September, 345,570 digital accounts had been opened so far by overseas Pakistanis and $3.44 billion hadbeen deposited into these accounts.

Baqir also highlighted three points that should give confidence to overseas Pakistanis about Pakistan’s economic outlook. “First, the successful containment of multiple waves of the Covid pandemic; second, the preservation of Pakistan’s macroeconomic fundamentals through the Covid shock, including a reduction in the public debt to GDP ratio and a more than doubling of the country’s foreign exchange reserves; and, third, the proactive and coordinated policy response of the government and the SBP to provide support to the economy during Covid.” Terming Covid the biggest catastrophe for the world after World War II, Dr Baqir noted with its high population density and under-developed healthcare system, Pakistan could had been very badly affected by the pandemic.

He, however, lauded the professional approach adopted by the government, including NCOC, to rein in the multiple waves of the Covid pandemic with much lower loss of human life than in other countries.

He especially pointed up the critical role played by the Ehsaas cash transfer programme, which had been globally recognised for its unprecedented coverage of the vulnerable population. Spotlighting the role of the SBP in helping the economy manage the fall-out from this global catastrophe, he said a number of historic measures were rolled out in record time, providing relief to households and companies during Covid equivalent to around 5 percent of GDP.