The senior management of the Pakistan Stock Exchange (PSX), including its chairman, Dr. Shamshad Akhtar, its MD and CEO, Farrukh H. Khan, and its board members, met with the Dr. Murtaza Syed, and its deputy governors, Ms. Sima Kamil and Dr. Inayat Hussain, during the meeting. Aqeel Karim Dhedhi, the chairman of the AKD Group and the Pakistan Stock Brokers Association (PSBA), Arif Habib, the chairman of the Arif Habib Group, Atif Bajwa, the CEO of Bank Alfalah Limited, Saquib Shirazi, and other significant market players were also present at the meeting.
The conference featured an extensive and lively debate on topics that directly affect the stock market as well as more general economic problems. The former governor gave a presentation to the attendees of the conference in which a comparison of Pakistan’s economy with other rising economies was made, emphasising how well Pakistan has done in compared to certain other nations. Through the lecture, Dr. Murtaza Syed discussed the prognosis for inflation, interest rates, and current accounts as well as long-term structural factors of the economy. He listed Pakistan’s need for external funding for the coming 12 months and noted that the IMF programme will completely cover them.
In reality, Pakistan will have extra funding because of the recent agreement to provide $4 billion in additional funds from allies. Pakistan’s foreign exchange reserves will benefit more as a result of FY23. Dr. Murtaza stressed throughout his speech that Pakistan’s tremendous challenges on its foreign exchange reserves, currency, and current account are only transitory in nature and are being forcibly handled by proactive and coordinated policy actions. According to Dr. Murtaza’s explanation of the forecast for the external sector, “the rupee came under substantial pressure during June and July 2022, principally due to a stronger US dollar internationally, the worsening current account deficit, and internal political instability.”
“SBP’s monetary policy stance and actions to cut the import bill were smart and essential for dissipating inflationary pressures and, as a result, for sustainable development in the medium term,” he continued. According to the former governor of SBP, imports are anticipated to fall in the coming months as a result of a little easing in the price of commodities globally and a moderating of local demand as a result of policy actions. Regarding the sustainability of the external sector, Dr. Murtaza underlined that the IMF program’s uncertainty has been removed by the news that the Board meeting for the upcoming IMF review would take place on August 29.
He continued by saying that a reduction in the current account deficit and an uptick in domestic mood are to blame for the rupee’s recent gain. In this regard, it will be crucial to make sure that imports—including imports of energy—remain at a sustainable level moving ahead. In this situation, he pointed out that it would be wise to practise power conservation in residential and commercial settings without having an impact on the industrial sector. He also stressed that the State Bank does act to calm the markets when the foreign exchange market gets chaotic and that it will do so going forward if needed. Strong measures have also been adopted to counteract any speculation, including thorough surveillance and examination of banks and exchange businesses.
SBP also let the participants know that FX contracts and L/C payments will shortly resume their usual patterns. The problem of the dividend declared by NBP was also brought up, and SBP promised that it would be resolved quickly. Margin financing, including sukuks and TFCs in the definition of ADR, permitting a part of the Yuan/PKR swap line for capital market investments, and the simplicity of creating SCRA accounts were some of the other topics covered. To address these issues and others, it was decided to form an SBP-capital markets coordination group.
“This is a terrific chance to deepen the conversation that was began by the federal finance minister during his recent trips to PSX,” remarked Dr. Shamshad Akhtar, Chairperson PSX, in welcoming the SBP delegation. At this meeting, where we will discuss how to put the choices made in consultation with the finance minister into action as a step toward improving the capital markets to give our economy the much-needed boost, I would like to welcome the SBP team and important stakeholders in the capital markets.
The PSX team discussed its viewpoint with the SBP during the meeting, highlighting how the capital market has been negatively impacted by inflation, interest rate increases, the depreciation of the rupee against the dollar, and the state of the economy. The PSX team expressed its desire to work with the SBP to develop solutions to these problems. PSX and all attendees praised SBP for their work under extremely difficult conditions and congratulated them on overcoming the current economic crisis. It was highlighted that Pakistan must take advantage of this chance to implement comprehensive reforms in order to avoid having to contact the IMF again in the future.
Participants in the capital market, including teams from top brokerage houses and corporate executives, praised the State Bank for its open dialogue with the public, attention to economic issues, and adoption of corrective measures like the application of austerity measures. The business and industry experts also stressed the need of preserving and enhancing international business partners’ trust in terms of upholding Letters of Credit and import contracts. “I thank the former governor State Bank, Dr. Murtaza Syed, and his team, along with capital markets stakeholders and industry leaders who have taken the time out of their busy schedules to discuss issues of crucial importance concerning the capital markets and his team,” MD PSX Farrukh Khan said in closing the session.
In addition to the discussions with the finance minister, he continued, “Today we had a fruitful discussion on both the macroeconomic environment and specific concerns pertaining to capital markets. I want to express my gratitude to the SBP once more for their assistance with the capital markets. Numerous ground-breaking and avant-garde projects have been launched under this leadership group that will aid in expanding and strengthening Pakistan’s financial markets. These include, among others, the local KYC sharing between banks and capital markets, the Raast Payment system, and the Roshan Digital Account. The current level of depth in contact is a sign of the growing partnership between banks and capital markets.
Such cooperation is necessary for Pakistan’s economy to expand steadily and in a balanced manner. We are optimistic that effective steps will be made to put the choices and conversations that have occurred so far into action under the visionary leadership of the State Bank and Ministry of Finance.
