Press Release 01/07/2021
Event Organized by Islamabad Policy Research Institute
Exclusive Talk by SBP Governor, Dr Reza Baqir
“Turning Crisis into Opportunity: The State Bank of Pakistan in the time of Covid-19”
Governor State Bank Dr Reza Baqir delivered a talk on pre-and post-Covid pandemic economic stabilisation role of the State Bank at the Islamabad Policy Research Institute (IPRI) on 1st July.
He mentioned about the current account and fiscal deficit state when he was called upon to take over the affairs of the State Bank. Despite pre-Covid straitened economic circumstances when the Forex reserves had plummeted to $7bn with a current account deficit of $19bn, the path to recovery was palpable when the pandemic struck and presented serious economic challenges in a depressed global and regional economic milieu.
State Bank interventions like change from fixed to market-based exchange rate and discount rate interventions helped arrest the economic slide and improved the fundamentals of economy. He explained economic recovery and relief measures like reduction in discount rates by 625 base points, which ensured that the liquidity losses did not become solvency issues.
He cited State Bank’s interventions like Temporary Economic Reform Facility (TERF) that had helped shore up industrial productivity in a demand depressed environment. The “Principal Loan Extension Program” and “Rozgar Scheme to Prevent Layoffs,” provided timely loan relief and working capital to entrepreneurs, as well as the worker class. The cumulative relief granted was to the tune of 5% of GDP with 95% of the beneficiaries of loan extensions being small and medium entrepreneurs.
The above relief regime was supplemented with a munificent housing and construction finance package with an improvement from erstwhile Rs 1.5bn to Rs 200bn. The Roshan Digital Account was another achievement of the State Bank, encompassing 171 countries; 181,556 accounts and $1.5bn worth of deposits.
The measure was an excellent vehicle to connect 7 to 9 million strong Pakistani diaspora with the national economy. Measures like Roshan Apna Ghar and Roshan Samajhi Khidmat are being introduced through digital means to enable non-resident Pakistanis settled abroad to be part of national economy. The biggest achievement, according to the Governor, was provision of relief and promotion of growth without an adverse impact on the fundamentals of the economy.