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KARACHI: The issue of current account deficit (CAD) will be resolved in the next two years, Governor State Bank of Pakistan Tariq Bajwa said on Monday.

Addressing a meeting at Korangi Association of Trade and Industry (Kati), the central bank governor said that the country’s foreign exchange reserves were under pressure due to rising imports as a result the trade deficit reached $36 billion and reserves shrank to $11bn.

“We claim to be an agricultural country but the annual food import bill has reached $5bn. We have to change this trend and contain it,” he stressed.

According to Kati’s press release, the SBP governor said the SME sector contributes 70 per cent to the country’s economy and the share of commercial banks in lending to small and medium enterprises was 17pc in 2006-07, but this has now dropped to 8pc.

The SBP chief has directed commercial banks to introduce creative products to increase lending to the SMEs.

Referring to a survey, the SBP governor said around 79pc SMEs prefer Islamic banking, but they are not opting Shariah-compliant financing on a similar level. Kati President Tariq Malik said the only solution to unemployment is to promote the SME sector. He urged the SBP to take measures to uplift the sector through easy lending policies.

Former president Kati Masood Naqi said industrialists and traders face many issues with commercial banks which were referred to SBP. There should be a mechanism for direct communication between the SBP and the business community, he added.

Published in Dawn, August 21st, 2018