Governor State Bank of Pakistan (SBP) Ashraf Mahmood Wathra visited Lahore Chamber of Commerce and Industry (LCCI) on Friday, March 3, and informed about an agreement to be signed between the SBP and the Central Bank of Iran that would allow the exporters in both countries to settle their claims.
He said that the cabinet committee has approved the agreement and it would be signed soon. As a result of this agreement, Pakistani and Iranian exporters will be able to settle their claims through State Bank of Pakistan and Central Bank of Iran respectively. He said, “Trade with Iran is very close to my heart. I am pursuing this since my appointment without wasting any moment.”
He said that this agreement would help boost trade volume in both countries. He also said that in Pakistan the credit to GDP ratio is correlated to the tax-to-GDP ratio which stands at around 11 per cent. He was of the opinion that by improving the former, the latter will also improve automatically. Answering a question the governor said that the issue of charity collection by Islamic banks would be monitored.
He added that restriction of cash margin has been imposed on selected consumer items primarily because we are spending around $8.5 billion on the import of certain consumer items that are unnecessary and are also being produced locally. He said that late payment limit for industries, i.e. 90 days, is not for sticking the label of defaulter but is only limited to information. He said that the law for the establishment of credit bureaus has also been approved that would help transmission of loans.
He added that the country’s economy has turned the corner because of supportive macroeconomic policies, successful completion of IMF program, sharp fall in oil prices and improvement in energy supplies. He said that markup and inflation are at the lowest, the budget deficit is low and real GDP growth rate has increased to 4.7 per cent in 2016 while remittances have also gone up.
The LCCI President Abdul Basit, Vice President Muhammad Nasir Hameed Khan, Provincial Minister for Industries Sheikh Alauddin, MNA Pervez Malik and top officials of SBP including Deputy Governor Saeed Ahmad also spoke on the occasion and shed light on various aspects of the economy, besides giving a number of suggestions.
The LCCI President Abdul Basit suggested that access of private sector to the credit should be easy and credit to GDP ratio should be enhanced. He said that credit to GDP ratio in Pakistan is merely 15 per cent, while our neighbours, India and China, have 141 per cent and 51 per cent respectively. He also said that banks should be directed to allocate a specific part of the loan portfolio for the SME sector and called for the establishment of banking channels between Pakistan and Iran, and Pakistan and African countries to ensure documented trade.
MNA Pervez Malik spoke highly about the economic achievements of the present regime. He said that critical reforms in fiscal, monetary, financial and energy sectors have brought the macroeconomic stability and said that the new phase of reforms would accelerate the economic growth.