CURRENT MONETARY

POLICY AND ITS

ISSUES
Group Members:
Ahmed Jan Dahri (15-MBA-03)
Asghar Ali Arain (15-MBA-09)
 Monetary Policy
Monetary policyis the process by which
themonetaryauthority of a country controls the supply
of money, often targeting an inflation rate or interest rate
to ensure price stability and general trust in the currency.
 Objectives Of Monetary Policy
Full employment

To attain price Stability

To Promote economic growth

To attain exchange stability

To Promote saving and investment

To Control Trade cycle

AHMED JAN
 Current Monetary Policy Of
Pakistan
State Bank of Pakistan maintained discount rate at 6.5%.
Improvement of in balance of payments in second half of
FY2014-2015.
Net state bank foreign exchange reserves over 6 months
from Dec 2014 June 2015, From $ 10.5 billion to $ 13.5
billion.
In short to medium term. The disbursement of extended
fund facility program related funding and planned
issuance of Eurobonds are expected to support an upward
trajectory in foreign exchange reserves.
 Current Monetary Policy Of
Pakistan
exports contracted by 3.7% in FY14-15 due to "structural
bottlenecks, sluggish global demand, and lower
commodity prices.
Net Foreign Direct Investment declined to 0.3% of the
Gross Domestic Product over the same time period.
Need to revive private inflows and exports to sustain this
trajectory in foreign exchange reserves remain there.
 Current Monetary Policy Of
Pakistan
Structural issues related to energy and security would
create a favorable investment environment.
Estimated reduction in the Fiscal Deficit in FY14-15 is
primarily due to improvement in tax revenues, and that
the revised budget estimates for the fiscal year display a
fiscal deficit 5% lower than the previous year's.
 Current Monetary Policy Of
Pakistan
Achieving the FY15-16 target of 4.3% depends on
collection of estimated Rs145bn from gas infrastructure
development and the Federal Board of Revenue's revenue
target of Rs3,104bn.
Total expenditure, however, is expected to remain higher
than budget estimates despite a reduction in subsidies
and lower interest payments.
 Current Monetary Policy Of
Pakistan
Broad Money (M2) had reversed in FY14-15 to 13.2pc.
Private sector credit increased by Rs208 billion during
FY15 as compared to Rs371 billion in FY14, structural
bottlenecks remain the major drag for the growth of
private sector credit and the public sector.
 Current Monetary Policy Of
Pakistan
The spread between the weighted average landing
rateupwards from 113 basis points in FY14 to 131bp on
average in FY15.
Liquidity conditions in the third quarter of FY15 remained
stressed by the fourth quarter of the fiscal year.
The SBP ensured that the money market average
overnight rate remains close to the newly-introduced
target policy rate at 6.5pc.
 Issues Of Monetary Policy
Current account deficit has narrow down.
Increase in foreign private inflows can further stronger
than this outlook and sustain stability in the foreign
exchange market.
The inflation continues with its downward trajectory in
this fiscal year.
Private sector business in fixed investment category that
can be increased to 84.4 billion.
 Issues Of Monetary Policy
Broad Money M2 has expanded by 7.3% during FY2015
against 7% during the same period.
Real GDP estimated grow by 4.2% in FY2015.
THANKS