In a major development, the federal government has announced that it will retire debt obtained from the State Bank of Pakistan in the next eight years. In his budget speech at National Assembly on Friday, Finance Minister Abdul Hafeez Shaikh also announced that the government will discontinue excessive borrowing from the central bank.
"We hear the complaints of the people and therefore are strongly committed to reducing the rate of inflation and we have already committed to discontinue borrowing from the State Bank through an amendment of the State Bank Act which national assembly has judiciously passed", the Finance Minister said. The government would also eliminate its debt to the State bank within a period of eight years, he added.
He said that through these efforts, like other prudent countries, the government has ended the period of fiscal policy dominating monetary policy. The government has reduced its borrowing from the State Bank through strict controls on spending to reduce inflation, he said.
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