Pakistan’s central bank announced a series of measures on Thursday to counter inflation and widening fiscal and current account deficits. The steps announced by Shamshad Akhtar, Governor of the State Bank of Pakistan, include the following:
* Discount rate increased by 150 basis points to 12.0 percent with effect May 23.
* Increase in cash reserve requirement for all deposits upto one year maturity by 100 basis points to 9 percent while keeping the CRR for deposits by over one year maturity unchanged at 0 percent.
* Statutory liquidity reserve requirement is increased by 100 basis points to 19 percent of the total time and demand liabilities.
* Effective June 1, all banks are required to pay minimum profit rate of 5 percent on interest bearing checking accounts.
* Effective May 23, Letter or Credit margins on all imports, except for oil and selective food imports, is being imposed at 35 percent. This is in response to the 44 percent growth in imports excluding the oil and food items.
* Akhtar also said the government should sterilise expected foreign inflows by using them to settle its obligations to State Bank, rather than to finance new expenditure. Retirements of the marketable treasury bills will help reduce the reserve money pressures and in turn reduce core inflation. reuters
* Discount rate increased by 150 basis points to 12.0 percent with effect May 23.
* Increase in cash reserve requirement for all deposits upto one year maturity by 100 basis points to 9 percent while keeping the CRR for deposits by over one year maturity unchanged at 0 percent.
* Statutory liquidity reserve requirement is increased by 100 basis points to 19 percent of the total time and demand liabilities.
* Effective June 1, all banks are required to pay minimum profit rate of 5 percent on interest bearing checking accounts.
* Effective May 23, Letter or Credit margins on all imports, except for oil and selective food imports, is being imposed at 35 percent. This is in response to the 44 percent growth in imports excluding the oil and food items.
* Akhtar also said the government should sterilise expected foreign inflows by using them to settle its obligations to State Bank, rather than to finance new expenditure. Retirements of the marketable treasury bills will help reduce the reserve money pressures and in turn reduce core inflation. reuters
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