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Pakistan

SBP says concerns about Pakistan 'unfairly overblown'

  • Acting Governor Dr Murtaza Syed says country being unfairly branded with other countries that are much more vulnerable
Published July 22, 2022
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Despite panic across the currency as well as the stock markets over the country's economic position, State Bank of Pakistan (SBP) Acting Governor Dr Murtaza Syed said Pakistan remains in a position to meet its elevated funding needs, while the crucial International Monetary Fund (IMF) bailout programme "puts a lot of daylight between Pakistan and more vulnerable countries".

“Concerns about Pakistan are being unfairly overblown,” Dr Syed was quoted as saying by Bloomberg. “The recently-secured staff-level agreement on the next IMF review is a very important anchor that puts a lot of daylight between Pakistan and more vulnerable countries.”

His statement comes as the local currency saw one of its worst falls in recent times, shedding nearly 7.5% in one week against the US dollar to close near the 227 level on Thursday, amid renewed concerns over inflation and cost of doing business. This was the fifth successive decline for the rupee, all of which were registered after the IMF announced the staff-level agreement.

On Friday, the rupee declined again to close at a fresh historic low, taking total depreciation to over 8% since Thursday last week.

Weighed mainly by global commodity prices: SBP sees FY23 most challenging for economy

Moreover, foreign exchange reserves continued to decline with SBP-held level hitting $9.329 billion, depleting import cover and raising concerns over balance-of-payments.

As per a SBP presentation made to foreign investors this week, Pakistan needs $33.5 billion during the ongoing fiscal year, while available financing stands at $35.9 billion for the period, added the Bloomberg report.

However, renewed political turmoil has triggered concerns over Pakistan's ability to finance its requirements, especially in the context of maintaining momentum in economic policies that would keep the IMF programme on track.

Last week, IMF reached a staff-level agreement (SLA) with Pakistan authorities for the conclusion of the combined seventh and eighth reviews of the Extended Fund Facility (EFF). Subject to approval of the IMF Executive Board, the lender would disburse about $1,177 million (SDR 894 million) to Pakistan.

However, it was later reported that the IMF is also assessing Saudi Arabia’s commitment to financing Pakistan before it disburses fresh funds to the country.

“Pakistan is being unfairly branded with other countries that are much more vulnerable,” said Dr Syed.

“This is because there is little discrimination between countries in the current times of panic across markets, which are responding in a broad-brush way to the global commodity super cycle, unprecedented Fed tightening, and geopolitical tensions.”

Comments

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Abdullah Jul 22, 2022 03:55pm
Very much true. Our debt situation, barring any further relief/subsidies, is still better than other frontier/emerging markets. Sri Lanka, Turkey and Argentina are facing far worse fates than us. But this era of dollar dominance is hurting the globe. There is a need to rethink international currency model.
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Mm Jul 22, 2022 04:08pm
What a joke?They think they can make everybody fool.
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Pakistani1 Jul 22, 2022 06:21pm
Dear Governor SBP. Many non resident Pakistanis are investing in Pakistan USD bonds to show support. Please do not disappoint them.
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Usama Ali Jul 24, 2022 08:45am
@Pakistani1, apni currency ka bera gharq kar dein non residents ki khatir? Yani 50 60 laakh logoun ke liye 22 crore logoun ko tabah kar dein?
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