Pakistan eyes 5.5% growth

yokohama — Pakistan’s Finance Minister Ishaq Dar said the central bank’s current acting governor probably wouldn’t be the permanent choice, as the country’s economy faces headwinds before elections next year.

The government of Prime Minister Nawaz Sharif will soon decide a new head of the State Bank of Pakistan after declining to extend the three-year term of Ashraf Wathra, who introduced South Asia’s first monetary policy committee last year after continued questions about the central bank’s independence. Riaz Riazuddin, a deputy governor, was selected as acting head in his place on May 1.

“I doubt whether he would be a permanent governor,” Dar said in an interview with Bloomberg Television on Friday in Yokohama, Japan. “Within three months, either we have to appoint somebody or anybody, it can be him or anybody else. Even the previous governor stands a chance.”

The change at the central bank comes as Pakistan’s economy starts to look vulnerable after boosting reserves and growth in the past three years with help from an $6.6 billion International Monetary Fund programme that ended in September.

Spending and loans taken on infrastructure projects under the more than $50 billion China-Paki-

Our own infrastructure financing and development needs are much bigger than the whole Asia Ishaq Dar, Pakistan’s Finance Minister

stan Economic Corridor is widening the current-account deficit as exports, such as textiles, continue to decline. There’s increasing concern Pakistan will be left with unmanageable debts.

Dar, who was attending the Asian Development Bank’s annual meetings, said that Pakistan had asked for a boost to its annual loan programme by $500 million to $2.5 billion by 2019 to help the economy, which he expects to grow by 5 to 5.5 per cent in the year ending June.

“Our own infrastructure financing and development needs are much bigger than the whole Asia,” Dar said. “Obviously one wishes to access more.”

Dar denied a report published in the Financial Times last week that Pakistan had asked state-owned Chinese banks to loan the government about $300 million in the first quarter of this year and $900 million in 2016 to fend off a currency crisis. “This is an untrue picture, we do normal business with all the banks all over the world,” he said. “We haven’t reached out to the Chinese government as such per say to help us, right now we are almost $16 billion reserves, so we have no issue at all.”

The central bank in its most recent quarterly report said Pakistan received $382 million in loans from China during the last quarter of 2016 to finance the country’s “growing current account gap.” Those disbursements reached $848 million in the first half of the year through June 2017. — Bloomberg