ISLAMABAD: The Finance Ministry terms that improved foreign exchange reserves and balance of payments’ position a good news for investors.
The foreign currency reserves are the amount of money held by the State Bank. In general use, foreign currency reserves also include gold and International Monetary Fund (IMF) reserves.
On the other hand, the Balance of Payments (BOP) of a country is the record of all economic transactions between the residents of a country and the rest of the world in a particular period (over a quarter of a year or more commonly over a year). These transactions are made by individuals, firms and government bodies.
“The good news for the investors is that State Bank of Pakistan (SBP reserves are now around $ 12.5 billion while commercial banks’ reserves exceed $5 billion” a well placed source at Finance Ministry told this scribe here on Monday saying that such a state benefit the investors to take out advantage of the available liquidity in the country.
This situation also attracts both the foreign and domestic investors to invest in the country without any fear of default or loss of their capital. The balance of payments position has improved further and the target for current account deficit for year 2014-15 is around 1% of GDP. It is also a very healthy sign for the investors to invest in preferred sectors.
Both of these factors also play a pivotal role in the development of Pakistan’s economy as well as Small and Medium Enterprises (SMEs). Many auto parts manufacturers are Small and Medium Enterprises (SMEs).
Keeping in view the importance of the SMEs, the Finance Ministry is developing a plan to further simplify procedures and to minimize hindrances for setting up businesses particularly SMEs in Pakistan.
This will provide a golden opportunity to investors to undertake capital expenditure and expand production capacity. Furthermore, in order to boost private sector borrowing, the government has decided to avoid central bank’s borrowing for financing budget deficit.
