State Bank of Pakistan (SBP) has announced Monetary policy for the next two months, left the benchmark interest rate unchanged at an eight-year high of 13.25%.
SBP Governor Baqir Raza addressed a press conference in Karachi n here on Tuesday, he said that the central bank has decided to maintain the interest rate and has kept its projection for inflation unchanged at 11-12% for the full fiscal year 2020.
Responding to statements that the central bank’s monetary policy rate is tight, he said that real interest rate is used to calculate monetary policy.
The Governor also told media in his briefing that based on the real interest rate our interest rates are not a lot they are less than average. He said Pakistan’s real interest rates compared to other countries in the region are not very high.
He also said that the economic activity was improving and the bank was announcing measures to boost the export sector, which is important for foreign exchange reserves.
SBP chief said that the central bank offers two schemes; Long Term Financing Facility (LTFF) and Export Finance Scheme (EFS) for the export-oriented sector.
“Today we are announcing that we are increasing the credit allocated to the sector by Rs200 billion [for both the schemes].”
Governor Baqir said that they were trying to control inflation but also wanted to lend support to the export sector that are boosting our reserves.
He said that the limit for LTFF was being increased by Rs100 billion and where previously it was available for some sectors it was now open to all sectors that contribute to exports.
“We want our exports to increase. As long as they are exporters they will be eligible for financing from LTFF scheme,” the governor added.
The purpose of this exercise is to support the export sector, which is must to make economic development sustainable.
He said that they will also bring a policy for small exporters in the coming weeks who want to innovate products.
“Apart from export facilitation, we are also announcing measures to help business community in investment.”
He also said that the volumetric production of cement and power sector are on the rise.