The Governor of the Central Bank of Pakistan said that Pakistan has taken a series of reform measures to strengthen its economy before the virus is infected, and is ready to take more measures as it faces a rare contraction.
The Central Bank Governor of Pakistan, Reza, said the central bank stopped lending directly to the government to help make up for its budget deficit and shifted to a competitive market rate, and took other measures to address external and fiscal imbalances. improve to support 2019 Economic Defense. Bakir said that in an interview on Tuesday. Since the virus infection this year, the central bank and the government have taken joint action to protect the economy.
“The policy response during Covid has been prudent,” he said, adding “we are absolutely ready to take more actions if there is a need.”
The Central Bank expects the South Asian economy to contract by 1.5% in the year to June, the first contraction in 68 years, as the coronavirus pandemic has put the world economy into the worst recession since the Great Depression. Bakir has cut 425 basis points this year in addition to Prime Minister Imran Khan’s over $ 2.5 billion spending plan announced to ease the shock.
“For emerging markets, the great global lockdown has been the mother of all external shocks,” said Baqir. “Among EM, the problem is particularly exasperated for high debt emerging markets because they have limited policy space to undertake expansionary policies.”
Part of Pakistan’s fiscal measures will be supported by the $ 1.4 billion emergency loan from Khan’s government from the International Monetary Fund, which last year has a separate $ 6 billion credit facility for the South Asian country approved to avoid balance of payments Crisis.
While the virus shock will reverse the progress made in reducing public debt, the IMF sees the setback as temporary and Pakistan remains committed to reducing its debt. The bank expects US debt to reach about 90% of gross domestic product (GDP) by the end of June, compared to an estimated 85% before the virus broke out. According to the International Monetary Fund, it will gradually decline over the next five years.
To prevent the spread of coronavirus infection, the second largest economy in South Asia has been blocked for six weeks until the end of April, from Wednesday this number has risen to 9,749. Some industries, including those with export obligations, were allowed to reopen.
The central bank also supports companies by allowing certain loans to be extended by one year. So far, the plan has benefited a quarter of about 1 million borrowers, with total loans totaling Rs 1 trillion ($ 6.2 billion). In addition, it offers companies credit at half the policy rate to avoid firing employees.
These measures have helped since last month to reverse the sharp decline in the rupee. The currency has risen 4.2% to about $ 160 in the past week.
“We have several areas we are working on, and refining them in light of development,” Baqir said. “It is more appropriate to talk about them once we feel the situation is such that we need to do more.”