Dr. Reza Baqir, the Governor of the State Bank of Pakistan (SBP), has called on the business community to reduce cash transactions to aid economic growth. Speaking to members of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Friday, Dr. Baqir emphasized the importance of promoting transactions through the banking system.
“Cash transactions are detrimental to the economy,” said Dr. Baqir. “People are making cash transactions without contributing their fair share to the national exchequer.” He stressed that increasing the use of banking transactions would improve transparency and ensure that individuals and businesses with taxable incomes are brought into the tax net, thereby fostering economic development.
The SBP governor also addressed various issues raised by the business community, including concerns related to the International Monetary Fund (IMF), interest rates, and inflation. He detailed the challenges posed by the sharp increase in the current account deficit from 2014 to 2017, which surged to $2 billion per month. This significant imbalance exerted pressure on the rupee’s value. “The exchange rate was artificially controlled during that period,” he noted.
The SBP Governor highlighted that since allowing the exchange rate to adjust, the current account deficit has been narrowing, and the foreign exchange reserves are stabilizing. These measures have been crucial in maintaining economic stability.
Regarding interest rates, Dr. Baqir explained that the SBP had raised rates to curb inflation. He acknowledged the fluctuations in interest rates from 2012 to 2019 but pointed out that private sector investment remained relatively stable despite these changes. “There are other factors that create hurdles in private sector investment,” he added, suggesting that addressing these issues would further enhance investment activities.
Dr. Baqir’s remarks underscore the SBP’s commitment to fostering a more robust and transparent economic environment. By encouraging the business community to reduce cash transactions and increase banking transactions, the SBP aims to enhance tax compliance and contribute to the overall economic growth of the country.
The SBP Governor’s engagement with the FPCCI reflects ongoing efforts to address the concerns of the business community and to collaborate on strategies that promote sustainable economic development. As Pakistan navigates through its economic challenges, the emphasis on reducing cash transactions and improving fiscal transparency is expected to play a vital role in achieving long-term economic stability.
In conclusion, Dr. Reza Baqir’s call to discourage cash transactions and promote banking transactions is a significant step towards improving the economic landscape of Pakistan. By bringing more taxable income into the formal economy and addressing key financial issues, the SBP is working to ensure a stable and prosperous future for the country.
