State Bank Officials Say Pakistan Not at Risk of Default

Senior officials of the State Bank of Pakistan (SBP) are of the view that Pakistan’s economic situation has improved in recent months and the country is not at risk of default. According to sources, the officials are confident that with the International Monetary Fund (IMF) program secured, meeting the external financing requirements would not be a problem. According to sources, the IMF has assured Pakistani authorities of prompt approval of the $1.17 billion tranche from the Executive Board after August 15. The central bank expects inflation for the current fiscal year to range between 18 and 20 percent. The central bank believes that the country’s external debt is sustainable, and there is no need to panic. Sources said that despite the political uncertainty, the IMF is aware that all the political parties in Pakistan are in support of the Fund’s program. Sources added that friendly countries have assured Pakistan of their support after the approval of the IMF program, and the country will receive sizeable funds from the friendly countries. For the past two years, GDP growth has ranged between 5 percent and 6 percent. However, the growth was not sustainable due to an increase in imports and rising deficit. The central bank expects GDP growth for the current financial year to be around 3 to 4 percent. According to the central bank officials, Sri Lanka’s deficit is three to four times compared to Pakistan. Moreover, Sri Lanka took more than two years to fix the policy rate and exchange rate, adding that Pakistan’s situation should not be compared with Sri Lanka.