ISLAMABAD: Governor State Bank of Pakistan Reza Baqir today said that Pakistan is looking at a current account deficit this year that is 2-3% of the Gross Domestic Product.
Addressing a press conference in Islamabad, SBP Governor said the State Bank, in its last monetary policy statement, said that it is looking at a current account deficit of 2-3% of the GDP which roughly translates to $6.5-9.5 billion.
He said that a lot of people expressed concern and inquired whether that was a sustainable level.
“In our assessment, it is a sustainable level of current account deficit.
“In emerging markets, especially where the economy is improving, where the GDP is on the rise, a moderate level of current account deficit is not bad news, it is good news,” he explained.
Baqir said international experience tells us that there are three “alarm bells” for a country whose current account deficit is on the rise.
“In Pakistan’s case, not even one of the three alarm bells is ringing,” he said.
The SBP governor went on to explain that the first thing to watch out for is “the level of the current account deficit”.
“In the past, we encountered problems when our current account deficit reached 6% of GDP. You may recall that after that, our reserves experienced a loss that forced us to go to the IMF (International Monetary Fund),” he said.