LAHORE: State Bank governor Reza Baqir told an audience of business leaders in Lahore on Saturday that the reasons behind the growing trade deficit in recent years was the absence of a market-based exchange rate, and tried to assure them that the economy is gradually improving. .
“In previous years, each time the trade deficit increased, the exchange rate did not adjust since it remained fixed. And it led to an increase in the deficit since there was an intervention in the system, "Baqir said while talking with the business community here at the office of the Federation of Chambers of Commerce and Industry of Pakistan (FPCCI).
"We have introduced the exchange rate in the market system by designing a policy that guarantees the monitoring of supply and demand movements," he added.
Previous policy of keeping the exchange rate attributed to the trade deficit fixed
The SBP chief said that due to a sustained political approach, the country's exports had increased between 10 and 20 percent. The government, he said, wanted to increase the profitability of private companies and promote employment. And if the private sector still has some problems with the public sector, the government would do everything possible to eliminate the obstacles.
“We believe in competition, because without this we cannot progress. Then, the private sector must come forward and do its part for the prosperity of this country, ”he said.
He said the country's economic condition was gradually improving as reforms were introduced. Not long ago, he reminded his audience, the country's foreign exchange reserves were inadequate to meet its external debt service obligations. "So we introduced reforms, signed an agreement with the IMF and devised effective policies," he said, adding that the situation is better now than 6 months ago.
Posted on Dawn, September 8, 2019