KARACHI: The central bank’s governor is confident that the country will have no problem in meeting foreign payment obligations as more Pakistani workers went abroad during the last fiscal year, hence more remittances are expected this year.
“Outlook remains positive as the number of Pakistanis who proceeded abroad increased by 16.3 per cent in 2015-16,” State Bank of Pakistan (SBP) Governor Ashraf Mahmood Wathra told a press conference on Thursday. More than 40pc of these people moved to Saudi Arabia.
“As of today, external debt servicing obligations for Pakistan are not more than an average of $5 billion per year until 2020,” he said.
Says number of Pakistani workers going abroad rose 16pc last fiscal year
The SBP governor added that the country successfully met higher obligations in excess of $6bn in 2012-13 and 2013-14, even with much smaller volume of foreign exchange reserves.
Downplaying hue and cry over a 20pc decline in the July remittances, he said the 10 holidays during the month blocked the inflows. Moreover, the gap looked bigger as remittances in June were much higher because of Eidul Fitr, he said.
And although year-on-year growth in remittances slowed down to 6.4pc in the preceding fiscal year, Pakistan still received around $20bn, he said.
On reports that thousands of Pakistanis have lost their jobs in Saudi Arabia and awaiting dues, he said the Saudi government has assured their payments would be cleared.
He stressed that macroeconomic indicators were much better than 2013 and some media people and analysts were painting a bleak picture of the economy with wrongly quoted data and without considering the relevant perspective.
The governor said the average gross domestic product growth during FY09 and FY13 was 2.8pc, which rose to 4.3pc during FY14 and FY16. Similarly, average inflation was 11.8pc during FY09-FY13 which fell to 5.3pc during FY14 and FY16.
Moreover, the country’s total public debt stock (excluding external liabilities) was Rs19.7 trillion as of June 2016. Of this, the domestic component was Rs13.6tr and the external component was Rs6.1tr. Thus, around 69.2pc of total debt was domestic.
He said Pakistan’s external debt has increased with an average growth of 6.2pc since 2013 and reached $57.7bn in FY16. He said the public sector external debt was eight times higher than the reserves of the State Bank in 2013 which has fallen to just 3.2 times.
“Power and gas supplies to exporting firms have largely been smoothened out. Law and order has improved. The government has committed to settle refund claims of exporters. Private firms are cash rich, and interest rates are also low; new investments will bring in innovation and may also help diversifying the product base,” he said.