Pakistan has been struggling to keep its economy afloat given the crisis that led to the prices of the basic commodities go beyond the roof. The Pakistan government had approached the International Monetary Fund in 2018 seeking a bailout to address the fledgeling economy.
The IMF had agreed on terms with the government in July this year. Reza Baqir, the chief of the State Bank of Pakistan in an article by The Hindu said, ” the goal is to have foreign exchange reserves that are sufficiently high and with that, we will not go back to the IMF for another programme.”
The country has made many structural changes and implemented various reforms which have managed to provide the economy with the much-needed breathing space. The governor also suggested maintaining a high forex reserve within the country to counter the shifting foreign exchange rates.
Baqir had earlier served as a member of the negotiating committee for Pakistan with IMF officials before the loan was approved. The loan provided a quick dispersal of one billion US dollars to counter the balance of payments crisis which was looming in Pakistan. He has also worked closely with the IMF chief in Egypt before being called to govern the State Bank of Pakistan.
During a lecture at the IBA university in Karachi, the governor said that the main challenge for the economy would be to maintain the high reserves. Earlier the Central Bank used to have control over the rupee-dollar exchange rate. It later had to let go following a sudden depletion in the foreign reserve that it let go of its control. The Bank still has the authority to intervene in the exchange rate if elements of currency manipulations are present.
(Inputs from agencies)