Overseas Pakistanis have benefitted from rupee depreciation: Dr Reza Baqir
- SBP governor says the result of any economic policy is that some benefit, and one should not forget those who benefit
State Bank of Pakistan (SBP) Governor Dr Reza Baqir has said that overseas Pakistanis have benefited from the ongoing depreciation of the Pakistani rupee against the US dollar.
The remarks were made by the central bank chief in a press conference in Manchester, United Kingdom.
"Rising dollar rates benefit some people and harm others. Overseas Pakistanis benefit because their family members receive more remittances. We should not forget those who benefit,” the ex-IMF official said.
“In every economic policy, some people benefit while others do not, so it should also be taken into account how many people have benefited."
Dr Baqir's statement comes as the PKR, which is being traded above 173 level in the inter-bank market, has lost over 12% of its value against the greenback since its recent high achieved five months ago, with economic experts expressing concern over rising inflation and the current account deficit.
Rising dollar rates benefit some people and harm others. Overseas Pakistanis benefit because their family members receive more remittances. We should not forget those who benefit: Dr Reza Baqir
Pakistan also received $8 billion in remittances during the first quarter of the current fiscal year, registering a growth of 12.5% over the same period last year.
Baqir, on the other hand, believes that the recent inflation hike is artificial, and Pakistan will overcome it soon.
Rupee edges near all-time low against the dollar
The Monetary Policy Committee of the SBP, however, has raised its key interest rate by 25 basis points, the first hike in over two years. In its statement back in September, it had said that while year-on-year inflation has declined since June, rising demand pressures together with higher imported inflation could begin to manifest in inflation readings later in the fiscal year.
"... at this more mature stage of the recovery, a greater emphasis is needed on ensuring the appropriate policy mix to protect the longevity of growth, keep inflation expectations anchored, and slow the growth in the current account deficit."
First hike in over 2 years: SBP raises key interest rate by 25 basis points
Meanwhile, talking about the ongoing negotiations with the International Monetary Fund (IMF), Dr Baqir said talks are moving in a positive direction and “no agreement that harms the country’s economy will be made”.
Earlier, IMF Director for Middle East and Central Asia Department, Jihad Azour, stated that the Fund’s mission to Pakistan and authorities are currently in the process of discussion around the sixth review of the program.
The progress has gone in a very good step and the mission with the authorities is going through the various details, said Azour.
Regarding the Financial Action Task Force (FATF), the central bank chief said that nearly all conditions of FATF have been fulfilled while expressing optimism that Pakistan would soon be removed from the grey-list of the global money laundering and terrorist financing watchdog.
Pakistan's current account deficit narrows to $1.11 billion in September
“26 out of 27 conditions of FATF have been fulfilled so Pakistan would be removed from the grey-list soon,” said Baqir.
The SBP governor said that Pakistan could also sign CPEC style agreements with other countries.
Talking on the external front, Baqir said that Pakistan’s GDP growth in the last financial year was about 4%. “The 4% growth in real GDP means that the income of the people has also increased by 4% as compared to inflation,” he said.
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