• About
  • Team
  • Advertise
  • Terms
  • Privacy Policy
  • Contact
INCPak
  • World
  • National
    • Islamabad
    • Azad Kashmir
    • Balochistan
    • Khyber Pakhtunkhwa
    • Gilgit Baltistan
    • Sindh
    • Punjab
    • FATA
  • Automotive
  • Tech
    • Tech News
    • Custom Roms
    • Tips & Tricks
    • INCPak Roms
    • Reviews
    • Phone Reviews
    • Stock ROMs
    • What’s new?
    • Computer Stuff
  • Business
  • Education
  • Entertainment
  • Information
  • Fashion
  • More
    • Fun Time
      • Kids Corner
      • Poems
      • Stories
    • Health
    • Editorial
    • Travel
    • Beauty
    • Food
    • Music
    • Movies
    • Sports
    • Documentaries
    • Personalities
    • History
    • Economy
    • Emergency Numbers
No Result
View All Result
  • World
  • National
    • Islamabad
    • Azad Kashmir
    • Balochistan
    • Khyber Pakhtunkhwa
    • Gilgit Baltistan
    • Sindh
    • Punjab
    • FATA
  • Automotive
  • Tech
    • Tech News
    • Custom Roms
    • Tips & Tricks
    • INCPak Roms
    • Reviews
    • Phone Reviews
    • Stock ROMs
    • What’s new?
    • Computer Stuff
  • Business
  • Education
  • Entertainment
  • Information
  • Fashion
  • More
    • Fun Time
      • Kids Corner
      • Poems
      • Stories
    • Health
    • Editorial
    • Travel
    • Beauty
    • Food
    • Music
    • Movies
    • Sports
    • Documentaries
    • Personalities
    • History
    • Economy
    • Emergency Numbers
No Result
View All Result
INCPak
No Result
View All Result

State Bank Monetary Policy Statement September 2020

by FIA
Sep 21, 2020
in Business
0

KARACHI: The State Bank of Pakistan (SBP) announced Monetary Policy keeping the interest rate unchanged at 7% till December 2020.

According to the Statement issued by State Bank of Pakistan’s Monetary Policy committee on Monday.

Monetary Policy
Front view of State Bank of Pakistan
  1. At its meeting on 21st September 2020, the Monetary Policy Committee (MPC) decided to keep the policy rate unchanged at 7 percent. The MPC noted that compared to the time of the last meeting in June 2020, business confidence and the outlook for growth have improved. This reflects the decline in Covid-19 cases in Pakistan and the easing of lockdowns, as well as the timely stimulus provided by the Government and SBP. At the same time, the forecast for inflation has risen slightly, primarily due to recent supply side shocks to food prices. Average inflation is now expected to fall within the previously announced range of 7 – 9 percent during FY21, rather than marginally below.
  1. The MPC noted that financial conditions continue to be accommodative with real interest rates remaining slightly below zero on a forward-looking basis. In addition, the series of targeted measures undertaken by SBP since the Covid-19 outbreak have injected significant liquidity and further lowered funding costs for many businesses and households. Together, these monetary measures have injected an estimated stimulus of Rs. 1.58 trillion, or about 3.8 percent of GDP, in the cash flow of businesses and households. In addition, the government has undertaken a number of significant measures to support economic activity including the Ehsaas emergency cash program, commodity financing, a risk-sharing facility for SMEs, and acceleration of tax refunds.
  2. Taking into account the changes in the outlook for inflation and growth since the last MPC and the impact of the stimulus measures undertaken by the Government and SBP, the MPC was of the view that the
    stance of monetary policy remained appropriate to provide needed support to the emerging recovery, while keeping inflation expectations well-anchored and maintaining financial stability.
  3. In reaching its decision, the MPC considered key trends and prospects in the real, external and fiscal sectors, and the resulting outlook for monetary conditions and inflation.

Real sector

  1. Following a deep contraction between March and June, the large-scale manufacturing (LSM) index returned to expansion in July, growing at 5 percent (y/y). High-frequency demand indicators including auto
    sales, cement dispatches, POL sales, and electricity consumption also reflect an encouraging pick-up in economic activity. Nonetheless, the economic recovery remains uneven across industries, with the hospitality and certain services sectors especially lagging, and the level of activity generally still remains below preCorona levels. Going forward, growth is projected to recover to slightly above 2 percent in FY21, after falling to -0.4 percent last year. The recovery is expected to be driven mainly by manufacturing-related activities and construction, which are being supported by various financial policies from SBP including the Temporary Economic Refinance Facility (https://www.sbp.org.pk/smefd/circulars/2020/CL20.htm) and the
    government’s incentives for the housing and construction sectors. The growth outlook is subject to uncertainty. On the downside, risks include a potential second wave of Covid-19 domestic infections, a possible sharp increase in infections in the winter months in Pakistan’s major export markets in Europe and the US, and the threat to agriculture from locust attacks. On the upside, a faster global recovery could lift
    exports higher.

External sector

  1. Despite a challenging environment, the external sector has remained resilient since the Coronavirus outbreak. The flexible market-determined exchange rate, introduced in May 2019, has played its valuable role
    as a shock absorber, as witnessed in orderly two-way movement of the currency. Low global oil prices and subdued domestic demand helped to reduce the current account deficit further during the onset of the
    Coronavirus. More recently, a gradual recovery is expected in exports and remittances have performed strongly on the back of orderly exchange rate conditions as well as supportive policy steps taken by the
    Government and SBP under the Pakistan Remittance Initiative. Remittances rose to a record monthly high in July and have topped US$ 2 billion for the last three months. By supporting the current account, which swung into a surplus in July, these developments have helped to restore SBP’s foreign exchange reserves to their pre-pandemic level of around US$ 12.8 billion. As a result, Pakistan’s reserve adequacy is now back above the important global benchmark of 3 months of import cover. Looking ahead, the current account deficit is expected to remain bounded at around 2 percent of GDP. This, together with expected private and official flows, should continue to keep Pakistan’s external position stable in FY21.

Fiscal sector

  1. Despite severe pressures from the Coronavirus and contrary to expectations, the fiscal deficit for FY20 ended lower than in FY19 and the increase in public debt was contained to around 1 percent of GDP. This
    largely reflects the strong steps taken by the government to ensure a primary surplus in the first nine months of FY20, which helped provide fiscal space to respond to the Coronavirus outbreak. During the first two
    months of FY21, in line with the gradual pick-up in economic activity, tax revenues returned to positive growth, averaging around 1.2 percent (y/y). While far below pre-pandemic growth rates, this recovery in tax
    collections represents an encouraging turnaround from the double-digit reduction observed during the last quarter of FY20, although risks remain around achieving the revenue target. Federal PSDP-related outlays almost doubled during July-August 2020 compared to the same period last year. Overall, in line with this year’s budget, the MPC expects that the pre-pandemic path of fiscal consolidation will resume as economic activity recovers in coming quarters.

Monetary and inflation outlook

  1. The MPC noted that, notwithstanding an uptick in headline inflation during June and July, core inflation has been relatively stable and demand-side risks to inflation remain well-contained. Like growth, the inflation outlook is also subject to certain risks. On the upside, risks revolve around food prices, especially in the wake of recent flood-related damages and potential locust attacks. On the downside, the main risk stems from a lower-than-expected pickup in domestic activity. On the global front, the future trajectory of oil prices will also have an important bearing on the domestic inflation outlook.
  2. In the wake of heightened risk aversion from banks due to the Coronavirus pandemic, private sector credit has recently been supported to a significant extent by SBP refinance facilities. These facilities, coupled
    with other supervisory actions related to deferment and restructuring of loans, have ensured the availability of necessary funding to businesses and households, providing important support to growth and employment.
  3. Overall, the MPC was of the view that the current monetary policy stance is appropriate to support the emerging recovery while safeguarding inflation expectations and financial stability.

Read More: USD to PKR: Dollar rate in Pakistan [21 September 2020]

Follow INCPAK on Facebook / Twitter / Instagram  for update.

Tags: FeaturedPolicy Statement UpdateSBPState Bank of Pakistan
ShareTweetSend

Related Posts

Closing Currency Exchange Rate in Pakistan, Currency Exchange Rate in Pakistan, Exchange Rate in Pakistan, Currency Rate, Closing Exchange Rate, Closing Currency Rate
Business

Interbank Closing Currency Exchange Rates in Pakistan – 20 March 2023

Mar 20, 2023
SBP, Bank Holiday, Pakistan Day, 23 March 2023
Business

SBP Announces Bank Holiday on 23 March 2023

Mar 20, 2023
GBP to PKR, British Pound to PKR, British Pound Rate in Pakistan, Pound to PKR, Pound to Pakistani Rupee, Pound Rate in Pakistan
Business

GBP to PKR – British Pound Rate in Pakistan Today – 20 March 2023

Mar 20, 2023
EUR to PKR, Euro Rate in Pakistan, Euro to Pakistani Rupee, Euro to PKR
Business

EUR to PKR – Euro Rate in Pakistan Today – 20 March 2023

Mar 20, 2023
Kuwaiti Dinar to PKR, KWD to PKR, Kuwaiti Dinar to Pakistani Rupee, Kuwaiti Dinar Rate in Pakistan, Kuwaiti Dinar
Business

KWD to PKR – Kuwaiti Dinar Rate in Pakistan Today – 20 March 2023

Mar 20, 2023
SAR to PKR, Saudi Riyal to Pakistani Rupee, Saudi Riyal Rate in Pakistan, Saudi Riyal to PKR
Business

SAR to PKR – Saudi Riyal to Pakistani Rupee – 20 March 2023

Mar 20, 2023
USD to PKR, Dollar Rate in Pakistan, Dollar to PKR, US Dollar, Pakistani Rupee, Exchange Rate, PKR, Currency Exchange Rate
Business

USD to PKR – Dollar Rate in Pakistan Today – 20 March 2023

Mar 20, 2023
AED to PKR, Dirham to PKR, Dirham Rate in Pakistan, Dirham to Pakistani Rupee, Dirham, AED
Business

AED to PKR – Dirham Rate in Pakistan Today – 20 March 2023

Mar 20, 2023
Load More

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Latest News

  • Sindh Announces Public Holiday on 23 March 2023
  • PTI’s Atif Munsif Khan Jadoon & 7 Others Killed in Abbottabad Attack
  • Twitter To Turn Off SMS 2FA For Unpaid Users After March 20
  • Interbank Closing Currency Exchange Rates in Pakistan – 20 March 2023
  • Federal Govt Announces Office Timings For Ramadan 2023
  • SBP Announces Bank Holiday on 23 March 2023
  • GBP to PKR – British Pound Rate in Pakistan Today – 20 March 2023
  • EUR to PKR – Euro Rate in Pakistan Today – 20 March 2023
  • KWD to PKR – Kuwaiti Dinar Rate in Pakistan Today – 20 March 2023
  • SAR to PKR – Saudi Riyal to Pakistani Rupee – 20 March 2023

INCPak Official logo

INCPak Official Logo
Independent News Coverage Pakistan (INCPAK) delivers the latest updated news on Current Affairs, Business, Sports, Entertainment, and Technology in Pakistan

Trending

  • Petrol Prices in Pakistan
  • USD to PKR Rates
  • MTMIS – Online Vehicle Verification
  • Ehsaas Program
  • Punjab Rozgar Scheme
  • Naya Pakistan Housing Program
  • Mera Pakistan Mera Ghar Loan
  • About
  • Team
  • Advertise
  • Terms
  • Privacy Policy
  • Contact

© 2023 Independent News Coverage Pakistan - Site is Powered by INCPak Team INCPak Team.

No Result
View All Result
  • World
  • National
    • Islamabad
    • Azad Kashmir
    • Balochistan
    • Khyber Pakhtunkhwa
    • Gilgit Baltistan
    • Sindh
    • Punjab
    • FATA
  • Automotive
  • Tech
    • Tech News
    • Custom Roms
    • Tips & Tricks
    • INCPak Roms
    • Reviews
    • Phone Reviews
    • Stock ROMs
    • What’s new?
    • Computer Stuff
  • Business
  • Education
  • Entertainment
  • Information
  • Fashion
  • More
    • Fun Time
      • Kids Corner
      • Poems
      • Stories
    • Health
    • Editorial
    • Travel
    • Beauty
    • Food
    • Music
    • Movies
    • Sports
    • Documentaries
    • Personalities
    • History
    • Economy
    • Emergency Numbers

© 2023 Independent News Coverage Pakistan - Site is Powered by INCPak Team INCPak Team.