Murtaza Syed, Acting Governor of the State Bank of Pakistan (SBP), defended the government amid the ongoing economic crisis, saying “we are not Sri Lanka, neither we are close to it”.
Sri Lanka is currently undergoing its worst ever economic crisis since it gained independence in 1948 following crippling foreign currency shortages, which has affected the import of essential items, including food, fuel and medicines.
Addressing an SBP podcast, Syed admitted that “there is no doubt that the economy is facing challenges and the economies of many countries are in trouble due to commodity high prices after Covid. Sri Lanka is one of them, but they did not manage well and took some wrong or late decisions that created problems for the country”, Dawn news reported.
“Pakistan is not Sri Lanka. The country was badly hit by Covid as their income from tourism dried up. The tourism-based economy failed to fight off the challenges. For two years, they allowed the budget deficit to increase, which brought pressure on the current account. They did not raise the interest rate for two years.
“For two years, Sri Lanka kept the exchange rate unchanged, which means they were using their reserves to keep the exchange rate at the desired level. It finally resulted in a large current account deficit and their foreign exchange reserves being depleted,” the SBP chief added.
He went on to claim that Pakistan was extremely cautious after Covid-19 and the SBP “provided stimulus while the government was more cautious and targeted”.
“The public debt increased by up to 10 per cent in most countries, but in Pakistan it fell. Our public debt to GDP, in fact, decreased from 77 per cent in 2019 to 71 per cent today, down by 6 per cent.”