State Bank of Pakistan Governor Dr Reza Baqir has said that in order to control the current account deficit, the exchange rate and policy rate are being adjusted keeping in view the rising demand for imports which is increasing owing to the surging incomes of people, reported 24NewsHD TV channel.

Mr Baqir claimed that the economy had been revived that had registered a growth from negative to 4%. It means that there must be a 4% increase in the people’s income, he added. He was of the view if the SBP cancelled Rs5,000 currency bill, then the people would start buying gold and dollar.

The governor was addressing a Business Leaders’ Summit in Islamabad on Wednesday. He stated that there was an increase of $16 billion in foreign exchange emphasizing that forex reserves could not be enhanced after taking loans. 

Mr Baqir held that demand for imports was on the rise because people’s incomes were getting better. It’s a vice versa thing, he added. 

He divulged that this year an increase of $5 billion was expected in textile export. He was hopeful that exports would be enhanced this year. 

Last time due to delay in response to the current economic policy, the current account deficit had risen. This time round, speedy decisions are being taken to halt the current account deficit and the exchange rate and interest rate are being adjusted according to the market requirements, Mr Baqir maintained.

The SBP governor opined if the central bank abolished the Rs500 currency note, then people would start accumulating gold and dollar. 

He stated that there was pressure on the currency exchange companies due to the volatile situation in Afghanistan. 

“The accounts of Afghanistan are sealed, there is a shortage of dollars over there. There is the likelihood that dollars might transfer from Pakistan to Afghanistan. The law enforcement agencies must check the flight of the greenback to the neighboring country,” he added.

Mr Baqir revealed that during a period of the last two and a half years, the debts ratio with regard to GDP was decreased from 86% to 83.5%.