" State Bank Ne Jo Iqdaam Liye Is Se Muashi Istehkaam Nazar Aya," Wazir e Khazana Muhammad Aurangzeb
" State Bank Ne Jo Iqdaam Liye Is Se Muashi Istehkaam Nazar Aya," Wazir e Khazana Muhammad Aurangzeb
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00:00 The currency stability, you have seen the currency stability in the last few months.
00:07 There are two or three main reasons for that.
00:11 First is that the steps taken in the Caretaker Administration around the administrative measures,
00:18 the Hundi Hawala was stopped, smuggling was stopped, the Afghan transit trade was checked.
00:25 These were the administrative steps which were taken.
00:28 And after that, the steps taken by the State Bank, to me it is the structural part which the State Bank fulfilled.
00:38 That the exchange companies were further increased with their capital requirements.
00:46 The exchange companies which were involved in speculation, those have been phased out.
00:51 The banks which already had exchange companies were told to open further booths.
00:59 And those who did not have exchange companies were told to open them.
01:05 To me that is a structural step.
01:08 When someone asks me that if the administrative measures are postponed and if there is no such delay, then what will happen?
01:17 But this is a structural way of bringing the whole FX activity into a regulated environment.
01:22 And that to me, therefore, is going to inshallah ensure that this type of speculation or speculative activity does not come back to this country.
01:34 And you all know better than me, because I was present in the private sector at that time.
01:39 And the talks that were being made at that time, that 300 will be done, 325 will be done, God forbid 350 will be done.
01:45 And we were following on the exchange rate side a 1.25% bank.
01:52 And the formal exchange rate was following that.
01:55 So these administrative steps that were taken, I give full credit to the State Bank of Pakistan.
02:02 The steps that they took, I think inshallah it will ensure a huge amount of stability in our currency as we go forward.
02:12 After that, I spoke about the foreign exchange reserve, that we left the 2 month import cover from the brink of default.
02:21 And now, Alhamdulillah, we are at 2 months of import cover, a little over $9 billion.
02:30 And see, this $9 billion, because you keep talking to the Governor, you have an interaction with the State Bank, again, full credit to the Central Bank.
02:40 Because this foreign exchange reserve of ours, is not only the quantum, but the quality of that reserve.
02:50 Because that has not been funded by debt stock.
02:53 And this is a very big thing, which inshallah, we will start on a very good note, and on a very strong note.
03:03 After that, we spoke about inflation, which you have seen, it peaked at 48%.
03:11 And after that, the number of 11.8% that came in May, I think it's very important.
03:19 Because of that, the core inflation came down, food inflation came down.
03:24 These are all factual situations and factual aspects which are there.
03:31 And on that basis, the policy rate, the monetary policy committee has taken the decision yesterday,
03:40 and it is very much in the domain of the State Bank and the monetary policy.
03:44 The exchange rate and the policy rate are very much the purview of the State Bank.
03:50 But as far as I am concerned, this monetary easing which has started now, is an independent marker.
03:58 That what we have seen in inflation and the positive real interest rate that we have to keep,
04:08 the State Bank and the monetary policy have seen so much cushion, to actually start moving it in the right direction.
04:15 Now, it can be discussed how much should have been cut, how much was cut,
04:19 but every central bank around the world is worried about the last mile.
04:25 Because every central bank in the world does not want to reverse their policy decisions.
04:32 That once we have started to ease it, start cutting the policy rate,
04:38 and then suddenly there is something due to which they have to increase the rate.
04:42 The effect that will have on the economy, I can fully appreciate how the central banks are looking at it
04:50 and how they want to take it forward.
04:52 But having said that, I think it is a very positive way forward in terms of how we see
05:00 or monetary policy has its own view, which you know is seen in single digit in early next year,
05:11 in terms of the fiscal year, and if that is the way to go, then this policy rate should gradually come down.
05:19 After that, markets have responded positively, and whether it is on the debt side or equity side,
05:29 it will be up or down, but from my perspective, the fact that foreign buying has come back into the market,
05:37 both on the equity side, and the fixed income institutional investors in Washington,
05:45 and then here in the last two to three weeks, the fixed income flows that have started to come back,
05:52 these are the signals that when macroeconomic stability comes,
05:58 when confidence is restored, that brings those flows back in.
06:04 So I think, Ali, if you want to add anything, but from my perspective,
06:15 these are a few things which I just wanted to mention.
06:19 I just want to close.
06:21 [Arabic]
06:32 We had very productive and constructive dialogue with the fund when they were here.
06:37 [Arabic]
06:42 The nine-month SBA successfully concluded, although the tenor was short,
06:49 but the discipline shown in it, that discipline has been accepted,
06:55 that Pakistan can show this discipline, that when we talk, we can follow through.
07:01 [Arabic]
07:18 The way I look at it, this is Pakistan program, which is being aided, supported, helped, and funded by the IMF.
07:29 [Arabic]
07:52 Strategic activity [Arabic]
07:59 The private sector or under the public-private sector partnership,
08:05 we can manage that activity as we go forward.
08:09 [Arabic]
08:14 From my perspective, I am very clear, this is the Pakistan program, which is being funded by the fund.