Govt poli­cies not sup­port­ive for macroe­co­nomic im­bal­ances: SBP

The Pak Banker - - Front Page -

KARACHI: The Gover­nor, State Bank of Pak­istan, Shahid H. Kar­dar has said that the fu­ture strat­egy to con­trol in­fla­tion must in­clude co­or­di­nated and timely re­sponse to chang­ing macroe­co­nomic con­di­tions.

It should in­clude a con­certed ef­fort to raise the pro­duc­tive ca­pac­ity of the econ­omy, SBP Chief said in a meet­ing with mem­bers of Fed­er­a­tion of Pak­istan Cham­bers of Com­merce and In­dus­try (FPCCI) here at Fed­er­a­tion House on Mon­day.

Re­spond­ing to var­i­ous queries re­gard­ing mon­e­tary pol­icy, he said mon­e­tary pol­icy has played its part in cor­rect­ing the macroe­co­nomic im­bal­ances but other govern­ment poli­cies have not been that sup­port­ive. Had the SBP not re­sponded, the in­fla­tion out­look and re­serve po­si­tion of the coun­try would have been worse. Shahid Kar­dar stressed that any de­lay in im­ple­ment­ing such a strat­egy would only make the pol­icy trade-offs much more dif­fi­cult re­sult­ing in con­tin­u­ing un­cer­tainty re­gard­ing de­sir­able eco­nomic out­comes. Kar­dar ex­plained that the growth in broad money and thus in­fla­tion would have been much higher if the pri­vate sec­tor had also con­tin­ued to bor­row unchecked from the bank­ing sys­tem along with the pub­lic sec­tor. He said some ob­servers can com­ment that avail­abil­ity of cheap credit to the pri­vate sec­tor would have sup­ple­mented pro­duc­tive ca­pac­ity, help­ing re­duce the out­put gap but given the de­te­ri­o­ra­tion in the law and or­der con­di­tions and en­ergy sec­tor prob­lems in the last three years, it is highly un­likely that in­vest­ments in the coun­try, by both lo­cal and for­eign in­vestors, would have grown rapidly. He ex­plained that what we have learned about the dy­nam­ics of in­fla­tion in Pak­istan is that in broad terms, in­fla­tion­ary pres­sures have been a mix of up­ward ad­just­ments in ad­min­is­trated prices, a per­sis­tence of out­put gap and in­con­sis­tent macroe­co­nomic poli­cies neg­a­tively in­flu­enc­ing ex­pec­ta­tions of in­fla­tion. -PB News

IS­LAM­ABAD: Prime Min­is­ter Syed Yusuf Raza Gi­lani com­ing for ad­dress­ing at Na­tional De­fence Uni­ver­sity on “My Vi­sion of Fu­ture Pak­istan”. -App

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.