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The document summarizes Pakistan's current monetary policy and issues. The State Bank of Pakistan maintained its discount rate at 6.5% and foreign exchange reserves increased from $10.5 billion to $13.5 billion over the last 6 months of 2014-2015. However, exports contracted by 3.7% due to structural issues while foreign direct investment declined. The fiscal deficit also improved but achieving further targets depends on gas infrastructure revenues and tax collection. Broad money supply increased by 13.2% but private sector credit growth was lower. Key issues include sustaining foreign exchange stability through private inflows and exports while continuing disinflation and increasing private investment.
Deskripsi Asli:
Current Monetary Policy Of Pakistan and Its Issues
The document summarizes Pakistan's current monetary policy and issues. The State Bank of Pakistan maintained its discount rate at 6.5% and foreign exchange reserves increased from $10.5 billion to $13.5 billion over the last 6 months of 2014-2015. However, exports contracted by 3.7% due to structural issues while foreign direct investment declined. The fiscal deficit also improved but achieving further targets depends on gas infrastructure revenues and tax collection. Broad money supply increased by 13.2% but private sector credit growth was lower. Key issues include sustaining foreign exchange stability through private inflows and exports while continuing disinflation and increasing private investment.
The document summarizes Pakistan's current monetary policy and issues. The State Bank of Pakistan maintained its discount rate at 6.5% and foreign exchange reserves increased from $10.5 billion to $13.5 billion over the last 6 months of 2014-2015. However, exports contracted by 3.7% due to structural issues while foreign direct investment declined. The fiscal deficit also improved but achieving further targets depends on gas infrastructure revenues and tax collection. Broad money supply increased by 13.2% but private sector credit growth was lower. Key issues include sustaining foreign exchange stability through private inflows and exports while continuing disinflation and increasing private investment.
ISSUES Group Members: Ahmed Jan Dahri (15-MBA-03) Asghar Ali Arain (15-MBA-09) Monetary Policy Monetary policyis the process by which themonetaryauthority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency. Objectives Of Monetary Policy Full employment
To attain price Stability
To Promote economic growth
To attain exchange stability
To Promote saving and investment
To Control Trade cycle
AHMED JAN Current Monetary Policy Of Pakistan State Bank of Pakistan maintained discount rate at 6.5%. Improvement of in balance of payments in second half of FY2014-2015. Net state bank foreign exchange reserves over 6 months from Dec 2014 June 2015, From $ 10.5 billion to $ 13.5 billion. In short to medium term. The disbursement of extended fund facility program related funding and planned issuance of Eurobonds are expected to support an upward trajectory in foreign exchange reserves. Current Monetary Policy Of Pakistan exports contracted by 3.7% in FY14-15 due to "structural bottlenecks, sluggish global demand, and lower commodity prices. Net Foreign Direct Investment declined to 0.3% of the Gross Domestic Product over the same time period. Need to revive private inflows and exports to sustain this trajectory in foreign exchange reserves remain there. Current Monetary Policy Of Pakistan Structural issues related to energy and security would create a favorable investment environment. Estimated reduction in the Fiscal Deficit in FY14-15 is primarily due to improvement in tax revenues, and that the revised budget estimates for the fiscal year display a fiscal deficit 5% lower than the previous year's. Current Monetary Policy Of Pakistan Achieving the FY15-16 target of 4.3% depends on collection of estimated Rs145bn from gas infrastructure development and the Federal Board of Revenue's revenue target of Rs3,104bn. Total expenditure, however, is expected to remain higher than budget estimates despite a reduction in subsidies and lower interest payments. Current Monetary Policy Of Pakistan Broad Money (M2) had reversed in FY14-15 to 13.2pc. Private sector credit increased by Rs208 billion during FY15 as compared to Rs371 billion in FY14, structural bottlenecks remain the major drag for the growth of private sector credit and the public sector. Current Monetary Policy Of Pakistan The spread between the weighted average landing rateupwards from 113 basis points in FY14 to 131bp on average in FY15. Liquidity conditions in the third quarter of FY15 remained stressed by the fourth quarter of the fiscal year. The SBP ensured that the money market average overnight rate remains close to the newly-introduced target policy rate at 6.5pc. Issues Of Monetary Policy Current account deficit has narrow down. Increase in foreign private inflows can further stronger than this outlook and sustain stability in the foreign exchange market. The inflation continues with its downward trajectory in this fiscal year. Private sector business in fixed investment category that can be increased to 84.4 billion. Issues Of Monetary Policy Broad Money M2 has expanded by 7.3% during FY2015 against 7% during the same period. Real GDP estimated grow by 4.2% in FY2015. THANKS