KARACHI: State Bank of Pakistan (SBP) Governor Dr Reza Baqir on Tuesday said the foreign exchange reserves of the country have improved and will increase further as the market sentiments and economic indicators are now very much positive.
“The increase in forex is not because of loans but after improved market sentiments. The central bank is in a position to build the reserves,” he stated during a press conference at SBP’s head office.
The governor said that he had come before media to speak on the recent economic development in the country; especially to announce two initiatives the central bank had taken for ease of doing business and for the facilitation of exporters.
The banks had also issued circulars in this regard.
He said in July 2018, SBP had restricted the advanced payments against imports due to pressure on reserves and current account deficit.
“With the passage of time, things improved and SBP felt comfortable to allow all advance payment up to $10,000 for each invoice,” he said. “SBP had started with small amounts so that small exporters could take more benefit from this step.”
The second circular was regarding the acquisition of services from abroad and such services could be acquired from abroad without prior permission from SBP’s Foreign Exchange Operations Department if the value of the specific service does not exceed dollars 10,000.
“After having positive results of such initiatives, the central bank could go for more initiatives,” the SBP governor said. “With the improvement in the external regime, SBP has moved for ease of doing business.”
For economic prosperity, he said, the country would have to rely on exports and short and long-term measures were needed in this regard. “SBP is going to introduce a short-term export finance scheme and long-term finance scheme (LTFS). Under LTFS, the loan would be offered at 5pc to textile exports and at 6pc to other sectors.”
He said the two schemes were very important to help boost exports, adding that financial limits for exports were also being increased. “Over time, new sectors would also be included in the list.”
He said the exporters, however, would have to enhance their capacity.
The SBP governor said the reforms introduced by the present government have started giving better results. “The economic indicators, including the Pakistan Stock Exchange, are performing much better. Now, we need to shift our orientation from inwards to outwards,” he remarked.