Pakistan CB keeps rates on hold as inflation steadies

Pakistan’s central bank (CB) kept its main interest rate at 13.25 per cent, having recently stopped hiking rates as data on the economy has begun to show that inflation is steadying.

The bank said it expected inflation to ease in the second half of the fiscal year to the end of next June and remain broadly unchanged in fiscal 2020 at 11 per cent to 12 per cent.

Furthermore, the current account balance, the broadest measure of the country’s trade with the rest of the world, turned to a surplus in October for the first time in four years, the bank said, meaning external pressure on Pakistan’s finances is receding.

“The market sentiment has begun to gradually improve on the back of sustained improvements in the current account and continued fiscal prudence,” the statement said.

“In the first four months of the current fiscal year, the current account deficit contracted by 73.5 per cent to $1.5 billion,” it added.

It said the government’s primary balance - the balance of revenue versus spending excluding debt-servicing costs - is likely to enter a surplus in the first quarter of next fiscal year for the first time in almost four years.

“This, together with the end of deficit monetisation has qualitatively improved the inflation outlook.” The bank last lifted rates in July, when it hiked by 100 basis points. It was the ninth increase since the start of 2018 as the country faced rising inflation, a big current account deficit and downward pressure on its rupee currency.

The International Monetary Fund is currently reviewing Pakistan’s progress on reforms agreed as part of a bailout package in July.

Under the terms of the $6 billion bailout, the government has put in place tough measures to meet a fiscal deficit target set by the IMF.

The rupee has appreciated 5.6 per cent since hitting a low in June, and inflation stood at 11 per cent year-on-year and 1.8 per cent month-on-month in October. The bank said it expected inflationary pressures to ease in the second half of this fiscal year.

Meanwhile the speakers at a diverse and distinguished audience from including China and Pakistan, organised by Pakistan-China Institute along with Power China, lauded CPEC as the “economic future of Pakistan” and termed CPEC as a “success story”.  The function was organised at a local hotel to present Report on Energy Projects of CPEC including a specific one on the first power project, the Port Qasim Power Project of 1320 MW.

Speaker of the National Assembly, Asad Qaisar was the Chief Guest while Umar Ayub, Minister for Energy was Guest of Honour who made a keynote speech along with Ambassador Yao Jing, Chairman of Pakistan China Institute, Senator Mushahid Hussain, Sher Ali Arbab, Chairman, Parliamentary Committee on CPEC, President of Power-China Resources, Du Chunguo as well as Sun Jianli from Power-China Headquarters, Beijing.

The NA Speaker Asad Qaisar appreciated the efforts of Power-China for promoting of CPEC and development of energy infrastructure in Pakistan, stating in clear term that the “Parliament of Pakistan fully supports CPEC and, InshaAllah, we will take it forward, including the second phase started with the Rashakai Special Economic Zone, whose ground breaking is scheduled in December 2019.” He also announced that the National Assembly will organise a seminar in December to discuss expansion of CPEC beyond Pakistan and China to Central Asia and he said that he had instructed the Parliamentary Committee on CPEC to initiate seminars in different parts of Pakistan.

Stating that “I am representative of China in Pakistan”, Asad Qaisar said that he would ask the Chinese friends to open up their market for Pakistanis especially in the field of agriculture.

He also praised the positive role of Senator Mushahid Hussain in the promotion of CPEC. Ambassador Yao Jing focused on the Phase-II of CPEC saying that Phase-I is already a “success story”. He also lauded the strong bonds of friendship between Pakistan and China.

Senator Mushahid Hussain Sayed thanked the Power-China for launching the first major CPEC power project at Port Qasim which gave employment opportunity to thousands and through their clean super critical technology, they are ensuring steps to safeguard the environment. Talking about his recent visit to the Port Qasim Power Plant, Senator Mushahid Hussain said that the smoke emitted from Port Qasim Power Plant is white in colour unlike the other power plants smoke nearby whose is dark, which shows the effect on the environment. He said that Power-China had empowered Pakistan’s energy independence and the long standing issue of chronic energy shortages and load shedding had been controlled.

News Network International/Agencies