That State Bank of Pakistan (SBP) governor Dr Reza Baqir is optimistic about country’s economic prospects is a fact. He believes the country has the capacity and financial cushion to ride out rising external account pressures being driven by a surge in global commodity prices.
“We are confident that they (inflation worries) will be suitably addressed by the measures that we have taken,” he was quoted as saying by a global wire service recently. In my view, however, SBP governor’s optimism is somehow misplaced.
The rupee slide, for example, tests the central bank’s ability in relation to the exchange rates. Moreover, rising prices of commodities have been hitting people very hard. The tools available at the disposal of both government and SBP are not working properly. The situation demands the SBP governor think creatively.
Naureen Khan (Islamabad)
Copyright Business Recorder, 2022
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