Finance Minister Muhammad Aurangzeb on Wednesday expressed hope that the State Bank of Pakistan (SBP) will lower the basis policy rate within this calendar year, citing prevailing rates of both average and core inflation.
“At present, the policy rate is at 11%,” he said at an event in Islamabad. “I am always very careful that the policy rate and the market-based exchange rate are very much the purview of the central bank, the State Bank of Pakistan, and the Monetary Policy Committee,” he continued, adding that he believed the prevailing inflation granted sufficient space for further reductions to the policy rate.
“I am very hopeful that during the course of this calendar year we will see movement in the policy rate going south,” he said.
The interest rate is currently 11%, which the central bank retained in its last MPC meeting, citing rising energy prices. The MPC is next due to meet in September.
During his press talk, the finance minister linked monetary easing to broader economic progress, saying national security and economic stability are interdependent. He said multiple economic indicators are showing improvement, including a 60% surge in the stock exchange alongside an increase in new investors.
“We are heading in the right direction,” he said, maintaining the government was working to provide a better environment for the business community and encouraging the private sector to lead the economy. “Our economic and financial achievements are being recognized globally. There is hope for further improvement in the coming days,” he said.
According to Aurangzeb, company registrations have risen by 250,000, loans to the private sector are up 38%, and the government has paid Rs. 1 trillion in debt servicing over the past year. He said the past year had also seen a decline in electricity tariffs, with further improvements anticipated, and ongoing reforms in tax administration.
The finance minister said the federal government is proceeding with a right-sizing process for 45 ministries and departments, maintaining the privatization of state-owned enterprises would accelerate. Agreements with China are also in progress, he said, reiterating the government’s intent to issue Panda Bonds by the end of the year.