LAHORE: Governor State Bank of Pakistan (SBP) Ashraf Mahmood Wathra Friday said Cabinet Committee had approved an agreement between the SBP and Central Bank of Iran that would soon be formally signed. He said the agreement would allow Pakistani and Iranian exporters to settle their claims through the State Bank of Pakistan and Central Bank of Iran, respectively.
He was speaking at Lahore Chamber of Commerce and Industry (LCCI). The SBP Governor said: “Trade with Iran is very close to my heart. I am pursuing since my appointment without wasting any moment”.
The agreement between the State Bank of Pakistan and Central Bank of Iran would help boost mutual trade volume, he added. He said in Pakistan and India, credit-to-GDP ratio was correlated to tax-to-GDP ratio that was around 11 per cent and 26 per cent in Pakistan and India, respectively.
He said credit-to-GDP ratio would automatically better tax-to-GDP ratio in Pakistan. To a question, Ashraf Mahmood Wathra said issue of charity collection by Islamic banks would be monitored.
He said restriction of cash margin had been imposed on selected consumer items and country was spending around $8.5 billion on the import of consumer items out of which a number of merchandise were unnecessary and being produced locally.
He said late payment limit of 90-day for the industries was limited to information only, not for labeling as defaulter. He said law for establishment of credit bureaus had been approved that would help transmission of loans.
He said economy had turned around due to supportive macroeconomic policies, successful completion of IMF programme, sharp fall in oil prices and improvement in energy supplies.
He said markup and inflation were at the lowest, real GDP growth rate was at 4.7 per cent in FY 2016 that was only 2.8 per cent during FY 2009-13, remittances grew to 19.9 per cent in 2016 from 11 per cent in during 2009-13.
He said budget deficit had been reduced to 4.6 per cent in 2016 as compared to 8.2 per cent during 2009-13. Speaking on the accasion, LCCI President Abdul Basit said access of private sector to the credit should be easy besides enhancing credit-to-GDP ratio.
He said credit-to-GDP ratio in New Zealand, China, India and Pakistan was 146 per cent, 141 per cent, 51 per cent and 15 per cent, respectively. He said “Banks should be directed to allocate a specific part of loan portfolio for the SME sector and lending to SME is nominal.” He said only one organisation was working for industry’s credit rating and there should be a separate agency for credit rating of SMEs.
He said banks should be given access to the database of Securities & Exchange Commission of Pakistan and Land Record Management Information System for online verifications.
The LCCI President called for establishment of banking channels between Pakistan and Iran and Pakistan and African countries to ensure documented trade.
MNA Pervez Malik spoke high of economic achievements by the present regime. He said that critical reforms in fiscal, monetary, financial and energy sectors had brought macroeconomic stability.
He said new phase of reforms would eventuaaly accelerate the economic growth. Deputy Governor of SBP Saeed Ahmed said Board of Directors of EXIM Bank was established by the Ministry of Finance. He added the LCCI proposal for representation of private sector in the BoD had already been forwarded to the Ministry.
