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Karachi, The State Bank of Pakistan (SBP) has announced that its monetary policy rate will remain steady at 22%, aligning with prior expectations. This decision was followed by a detailed briefing from the SBP Governor, outlining key fiscal projections and strategies.
According to AKD Securities Limited, the SBP Governor provided several insights during the post-monetary policy statement (MPS) analyst briefing. The central bank expects inflation to moderate in the latter half of the current fiscal year, with revised Consumer Price Index (CPI) inflation targets to be announced in the next Monetary Policy Committee meeting. The previous target was set between 20-22%.
Maintaining a forward-looking stance, the SBP is committed to keeping real interest rates on a positive trajectory. On the external front, the Governor detailed Pakistan’s total external debt obligations for the year at US$24.6 billion. This includes US$20.7 billion in principal and US$3.9 billion in interest, of which over US$5.4 billion has already been repaid.
The remaining external debt, amounting to US$19.2 billion, is expected to see US$12.4 billion rolled over, with US$9.3 billion already confirmed. This leaves a net amount of US$4.3 billion in principal and US$2.5 billion in interest payments due over the next seven months.
Further, the Governor highlighted the anticipated International Monetary Fund (IMF) tranche of US$700 million due in January, which is expected to unlock additional inflows from multilateral partners. He asserted that the current SBP-held reserves, amounting to US$7.0 billion, are sufficient to meet foreign obligations even without these inflows.
The SBP also predicts that its profits for the current fiscal year (FY24) will exceed last year’s total of PkR972 billion. For the ongoing quarter, the central bank anticipates meeting the IMF’s requirements for net international reserves and Net Domestic Assets (NDA), independent of the IMF tranche inflow.
The IMF projects gross foreign exchange reserves to close at US$9.0 billion by the fiscal year-end. Revised estimates will be shared following the next IMF executive board meeting.
Addressing queries about Islamic banking, the SBP Governor clarified that establishing a minimum deposit rate for Islamic banks is not under consideration, as it contradicts Shariah laws. The bank is, however, consulting with the Shariah board to devise a solution that balances customer interests with Shariah compliance.
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