SBP rebuffs statements attributed to Governor Bajwa, terms them ‘misleading’

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ISLAMABAD: The State Bank of Pakistan has rebuffed a news report entitled ‘Pakistan has come out of financial crisis: SBP governor’ published on Feb 19th and an editorial entitled ‘SBP governor’s remarks’ published on Feb 20 in an English daily.

“To put the record straight, the factual position is rather different from the insinuations attributed to the governor’s interaction with the press. In fact, the conversation reported in the story and the editorial attributed to the SBP governor is misleading,” the central bank clarified in a statement on Friday.

“More specifically, the news items contain two contentious assertions attributed to the press conference: (i) ‘Governor of the State Bank of Pakistan Tariq Bajwa has said the country has come out of the financial crisis with the help of friendly countries and the economy has been set on the right path,’ and (ii) a different editorial goes on to comment ‘the SBP governor raised more than just a few eyebrows when he said at a private event that Pakistan’s economy had come out of a financial crisis’,” the statement added.

Both these assertions are unfactual and rebutted by SBP, the central bank asserted, adding that SBP Governor Tariq Bajwa never used the term “financial crisis” during the entire press conference.

“Further, assuming these premises, the editorial goes on to claim inconsistencies between SBP’s monetary policy statements and its quarterly/annual reports, and the purported statements of the governor at the press conference,” the central bank stated. “Publishing a story and editorial without fully verifying the facts, particularly during the times in which important stabilization measures are working their way through the economy, weakens public confidence while unhinging expectations.”

On the question of whether the federal government had crossed the limit set for SBP borrowing, the governor had only clarified that the law (Section 9C of the SBP Act) does not set any limit on government borrowing from the SBP.

He further explained that under the said law, the government was required to bring its SBP borrowing to zero at the end of each quarter and if it does not, then the finance minister has to make a statement on the floor of the house.

“This was a clarification given on a specific question and in no way changes the SBP stance that borrowing from SBP is more inflationary than borrowing from commercial banks,” the central bank concluded.

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