Wednesday, August 4, 2021

Monetary policy: SBP maintains interest rate; extended loans for exporters

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KARACHI: The State Bank of Pakistan has maintained the interest rate at 13.25 per cent after ruling out any possibility for making a reduction in view of real interest rate in its new monetary policy announced by SBP Governor Dr Reza Baqir, ARY News reported on Tuesday.

Dr Reza Baqir, while addressing a press conference after the conclusion of a session of Monetary Policy Committee (MPC) today, said the interest rate will be retained to 13.25 per cent, whereas, the inflation rate is expected to be maintained between 11-12 pc in the current fiscal year.

The committee decides to maintain its policy rate citing the rise in inflation which could be reduced after making improvements in supply process.

Reza Baqir expressed fear of agriculture production below its target this year, however, overall production in other sectors witnesses an increase besides a rise in economic activities. He said the central bank recorded increase in cement production and supplies.

He said the central bank has prioritised encouragement of export sector while positive indications are being made from the textile sector.

The SBP governor announced to increase volume of easy loans up to Rs200 billion for export sector. He stressed upon establishment of new factories by export sector which would create employment.

The Long-Term Finance Facilities will be available to every exporter, whereas, the limit of LTFF was jacked up to Rs5 billion in the new monetary policy. Moreover, an increase of Rs100 billion was also made in the volume of long-term loans.

He elaborated that improvements are seen in the economic stability. The inflow was recorded up to $2 billion from July 2019 to December 2019 as foreign investment was made in treasury bills.

Baqir said inflation rate will be reduced after the implementation of strict monetary policy and reformation programme will be continued in the monetary sector of Pakistan.

The SBP governor said small-scale exporters will be given facilities in the next few week as exports are necessary to increase exchange reserves. The SBP authorities are efficiently working to bring further improvements in current account and financial deficits through effective reforms besides making efforts to increase investments in Pakistan’s markets.

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