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Print Print 2022-07-25

Pakistan not among most vulnerable countries: SBP

  • SBP team engaged with global institutions to overcome adversities in international economic environment
Published July 25, 2022

KARACHI: Acting Governor of the State Bank of Pakistan (SBP) Dr Murtaza Syed has said that economically, Pakistan is not among the most vulnerable countries in the world and the capable team of the central bank is engaged with global institutions to overcome the present adversities in the international economic environment.

In continuation of an informative podcast series launched by the SBP, a video interview of Dr Syed and two deputy governors of SBP, Dr Inayat Hussain and Sima Kamil, has been released. The podcast was hosted by Spokesperson Abid Qamar.

In the podcast, the senior officials of the SBP sought to allay concerns about the economy and give confidence to the nation by rejecting “fake news”.

They discussed the rumours currently being circulated among the masses and also answered several questions being raised about the central bank and its management.

They assured the nation that the current leadership of the SBP is fully capable of and fully authorised to manage all the regulatory functions involved. It is fully engaged with global institutions to overcome the present adversities in the international economic environment.

They urged the nation to reject the negative and fake news being circulated on the social media, as a new SBP Board has been appointed now.

Pakistan’s financing needs fully met for this year, says SBP chief

Analysing the current vulnerability of the national economy, Dr Syed said that as the world is still in the process of overcoming the impacts of the Covid-19 pandemic, the next 12 months will be very challenging for the global economy. Record increases are being witnessed in the international commodity prices and the Federal Reserve is tightening its policies, while all countries are worried about geopolitical tensions.

The emerging markets are facing a sharp hike in inflation, while financial pressures are growing in countries with high debt levels, he added. However, he expressed his belief that Pakistan is not among the most vulnerable countries in the world, so its citizens need not panic.

This optimism is based on the following three fundamental reasons:

Pakistan has a reasonable debt level at 70 percent of its Gross Domestic Product (GDP). It is not justifiable to categorise Pakistan’s ‘Debt-to-GDP’ ratio with that of Ghana whose debt ratio is 80 percent, Egypt 90 percent and Zambia 100 percent. Sri Lanka has a ratio of 120 percent.

Moreover, Pakistan’s External Debt is 40 percent of the GDP, while Tunisia has a ratio of 90 percent, Angola 120 percent and Zambia over 150 percent. Fortunately, Pakistan is relying more on its domestic debts, which are payable in our own currency and are easier to manage, as compared to external loans which are payable in foreign currencies.

He said that only 7 percent of Pakistan’s External Debts are of Short-Term nature; other countries have taken much higher Short-Term External loans, like Turkey (30 percent).

Copyright Business Recorder, 2022

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