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SUKKUR: Governor, State Bank of Pakistan (SBP), Dr Shamshad Akhtar has said that every step would be taken to meet the credit needs of the productive sectors.
Addressing a delegation of Sukkur Chamber of Commerce and Industry (SCCI) in Sukkur, she said that SBP has strengthen its mechanism for monitoring liquidity requirements and taken appropriate actions to meet multiple demands of financing.
SBP Governor said that she has already advised the bankers not to indulge in deriving interest rates and exchange rate based on mere sentiments and rumours.
“Bankers are also taking necessary measures to arrest the declining growth of deposits,” she said.
Dr Shamshad Akhter said that there were visible signs that inflation in Pakistan was on a steady decline adding that country was now out of the woods as the country had illustrated well its ability to achieve a high growth track record and offer promising prospects to investors, both domestic and international.
She said that microfinance programme was being launched at a massive scale. Only the poor and salaried people were paying tax (regularly) and the country needed to develop a culture of saving and investment, she said.
Dr Shamshad said that after showing strengths and potential over the past few years or so, Pakistan faced a difficult year as its journey on path to high economic growth was disrupted.
The domestic resources mobilisation lagged behind investment requirements and delays in structural reforms in core infrastructure sectors resulted in acute shortages, which together affected overall economic performance, she added.
SBP chief said that despite a moderation in investment of GDP ratio during financial year 2008, saving investment gap widened by 3.2 per cent points due to a sharper decline in savings to GDP ratio.
She pointed out that global commodity price shock hit Pakistan the most, as the country was heavily dependent on oil imports.
The lower than expected performance in real productive sectors was due to high international commodity prices, energy shortages, below target harvest of some key crops, which were hit by water shortages and uncertainty during political transition, she observed.
At the outset of fiscal year 2008‑09, the government and central bank had together developed a macroeconomic stabilisation package, which had helped to have a buy‑in from the international agencies, she said.
Dr. Shamshad Akhter said that the government had now widely acknowledged the inflationary impact of its sizeable borrowings from the central bank that reached undesirable levels close to Rs380 billion during July‑November 17, 2008.
During 2007‑08 periods, the central bank had to revise its monetary policy rate at least three times, she said and added that Pakistan had well illustrated its ability to achieve a high growth track record and offer promising prospects to investors.
Later, talking to mediamen, the SBP Governor said that the discount rate had been increased to tighten the monetary policy and bring down the inflation to 6.5 per cent for 2007‑08.
The higher discount rate will increase the lending rates and the high cost of money will push the cost of production up.
Last year the SBP had set the inflation target at 6.5 per cent but the year ended with the average of 7.8 per cent. High credit flows under the export finance scheme and government borrowings were the major causes, along with volatile food prices, she said.
“Now the commercial banks are being supplied 30 per cent credit to the exporters under the scheme while the rest funding by SBP,” said Dr Akhtar.
To a question, she said the State Bank introduced zero rating of Cash Reserve Requirement (CRR) for all deposits of one‑year and above maturity and 7 per cent CRR for other demand and time liabilities.
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