Apropos a news story entitled ‘Pakistan has come out of financial crisis: SBP governor’ published in Dawn on Feb 19, and the editorial entitled ‘SBP governor’s remarks’ published on Feb 20, the State Bank of Pakistan has issued a clarification.

It says the news item contains two contentious assertions attributed to the press conference: (i) ‘Governor of the State Bank of Pakistan Tariq Bajwa has said the country has come out of the financial crisis with the help of friendly countries and the economy has been set on the right path,’ and (ii) the editorial goes on to comment ‘The State Bank Governor raised more than just a few eyebrows when he said at a private event that Pakistan’s economy had come out of a financial crisis.’

Both these assertions are un-factual and rebutted by SBP. Governor Bajwa never used the term ‘financial crisis’ during the press conference.

To the question whether the federal government had crossed the limit set for the SBP borrowing, the governor had only clarified that the law i.e. Section 9C of the SBP Act does not set any limit on government borrowing from the State Bank.

He further explained that under the said law GOP was required to bring its SBP borrowing to zero at the end of each quarter and if it does not then the finance minister has to make a statement on the floor of the house.

This was a clarification given on a specific question and in no way changes the SBP stance that borrowing from SBP is more inflationary than borrowing from commercial banks.

Published in Dawn, February 22nd, 2019