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Tuesday, February 20, 2024

Rising international prices to impact Pakistan’s economy, Reza Baqir

In a meeting of the Monetary and Fiscal Policies Coordination Board, the finance minister and the governor State Bank of Pakistan apprised the members of Pakistan's current economic situation, and the government's initiatives to incentivize economic growth.

Monetary and Fiscal Policies Coordination Board (MFPCB) met on Wednesday to discuss the country’s economic status quo concerning the ongoing surge in international commodity prices and its impact on Pakistan’s economy.

The experts noted that the international commodity prices will impact Pakistan’s import bill and by extension the current account deficit (CAD), which the government has been trying to keep low, Dawn reported.

The members of the meeting decided to have better coordination and apply greater vigilance for the policy adjustments to support higher economic growth.

In the presidency of Finance Minister Shaukat Tarin, Governor SBP Dr. Reza Baqir informed the Board about the monetary policy stance and shared the analysis of the SBP on the policy rate, credit availability, exchange rate movement, and the inflationary situation.

Dr. Baqir reportedly pointed out that the global market’s commodity prices would have consequences for Pakistan in the form of higher import bill and rising inflation.

The meeting was also informed that it is an encouraging sign that exports are picking up along with the rise in machinery imports, which will enhance the economy’s productive capacity and create an exportable surplus.

Governor SBP also explained the policy measures that the state bank is undertaking to incentivize business activities in different sectors of Pakistan’s economy. He underscored that there are many opportunities for investors, exporters, and the youth of Pakistan to benefit from SBP’s schemes for the business sector.

Dawn reported that the finance minister asked the board to design and execute policies to achieve the set economic targets while overcoming the possible risk. He urged that the Board be more proactive in reviewing the impact of fiscal and monetary policies on economic growth, employment, and the external sector of the economy.

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Mr. Tarin also updated the board on Pakistan’s current economic situation and mentioned the major incentives given in the recent budget which has led to an improvement in business confidence and has initiated economic recovery of the country.

He said that all key economic indicators relating to the real sector of the economy, fiscal sector, monetary and external sectors were going well and the government was proactively executing all policy measures to achieve the major socio-economic targets of the current fiscal year.

The finance minister mentioned the foreseeable risks to the economic activities in the country, and the strategy that has been chalked out to mitigate/counter these risks. These strategies were appreciated by the board.

The secretary of finance informed the Members of the Board about the budgetary allocations for various activities and told them about the ways and means to maintain fiscal discipline.

He also shared the strategy to curb the non-development expenditure with the focus to optimally utilize resources of the country and improve the service delivery at large for the common man.

Deputy Chairman Planning Commission briefed the members about the execution of development activities.

He highlighted the possible options for resource mobilization and to utilize them effectively for the development of potential sectors of the economy.

Adviser to the PM on Commerce and Investment Razak Dawood briefed about the structure of trade of the country along with major destinations and the steps in the process to enhance exports in potential areas.

He also noted various types of imports which can be reduced by import substitution.

A comprehensive roadmap to minimize the trade deficit of the country was also discussed in the meeting. It was also highlighted that fiscal and monetary facilitation will continue for potential sectors of the economy.

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Senior economist Dr. Asad Zaman appreciated the major fiscal and monetary measures by the government, which are supporting the business activities. He also highlighted the potential areas where Pakistan has comparative advantages in the export market and also identified some low-hanging fruits for import substitution.