KARACHI: The State Bank of Pakistan (SBP) on Wednesday said it plans to introduce a flexible inflation targetting framework for its monetary policy regime with a view to enhance its effectiveness.
Federal Minister for Planning, Development and Reforms Ahsan Iqbal presided a meeting with SBP Governor Ashraf Mahmood Wathra and senior management of the Planning Commission and the central bank.
The minister was apprised that by introducing an explicit range of inflation target, it would be easier for households and businesses to understand economic conditions and form future expectations accordingly. Moreover, the strategy would allow SBP to balance the need for price stability with economic growth.
Senior officials of the SBP gave a detailed presentation on adoption of flexible inflation targetting regime; challenges and potential strategies to boost country’s exports and initiatives taken for strengthening of the agriculture sector.
The minister said getting Pakistan amongst top 25 economies of the world by 2025 requires very concerted and coordinated efforts by all stakeholders.
“We have not been able to realise our true potential in many areas including industry, export, agriculture and human resource due to the lack of a shared vision,” he said.
“The SBP has a wealth of experience and knowledge. The Planning Commission intends to collaborate with it in order to arrive at a shared understanding for future of country’s economy,” he added.
Mr Wathra said the initiative for engagement of SBP and Planning Commission on various economic issues is a step in the right direction.
He assured the SBP will work closely with Planning Commission for evolving a roadmap for economic progress of the country. The meeting was informed that expansion of agricultural finance is a key pillar of SBP’s strategic plan for financial inclusion.
“Agriculture lending has grown by more than 100 per cent in the past five years, from Rs263 billion in 2010 to Rs598bn in 2015-16, whereas non-performing loans in agri-lending are down from 17.8pc in 2011-12 to 13.5pc in 2015,” the meeting was informed.
SBP envisions the growth in agricultural credit by 10pc each year, over the next five years to reach Rs1 trillion by year 2020. An estimated 500,000 new farmers are expected to be added into the formal financial network by 2020 as per its Vision 2020. Earlier, the minister performed the opening bell gong ceremony at the Pakistan Stock Exchange (PSX). Addressing the ceremony, Mr Iqbal said Pakistan needed an ‘economic march’ instead of ‘political march’ to join the group of strongest economy in 2025.
He said Pakistan Stock Exchange was an emerging stock market in the region, which reflected the growing confidence of investors. Speaking on the occasion, PSX Chairman Munir Kamal said the rapid growth of stock market was the reflection of the government’s positive policies.
Courtesy : Dawn News