Finance Minister Senator Muhammad Aurangzeb shared an update on the current economic situation and macroeconomic stability achieved across all sectors of the economy during Friday’s meeting of the Economic Coordination Committee (ECC) of the Cabinet.
The minister said the currency was now in a stable position with foreign exchanges at a 26-month high on the back of very resilient and strong remittances flows.
He said the IT exports had also stabilized at about $300 million monthly figure which was great news for our export sector. He also lauded a steady growth in the RDAs with $165 million inflows received last month.
He called the reduction in inflation to a single digit a big story, hoping that inflation would further come down when the September data is released.
He described the situation with the Current Account as very encouraging and noted the surplus of $75 million achieved in August. He hoped that with softer oil prices, a softer dollar and an aggressive rate cut which had already been reduced by 450bps, the current account situation would continue to be in a good position.
He also spoke about the rejection by the government of all bids for treasury bills on Wednesday, saying the move was aimed at conveying the message that the government was under no desperation to borrow, and if it were to borrow, it would borrow at its own terms.
He urged the banking system to focus on lending to the private sector. He said the cut in policy rate and the resultant ease in borrowing would help the government reduce its single largest expenditure of debt servicing and create room for the banking sector to step up and lend aggressively to the private sector.
The minister also referred to the IMF Board meeting scheduled for September 25, and said we would hear good news on the 25th and move on from there.
He noted that macroeconomic stability was not an end itself but a means to an end. He called it the basic hygiene and the building blocks that provide foundation to the whole edifice. We would move in the right direction based on this approach and ensure gradual stability in the micro sectors as well, he added.
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