The Central Bank will continue to closely monitor the situation and stands ready to take measures, as needed, to address any unwarranted volatility in the foreign exchange market.
The SBP report mentioned that the overall fiscal deficit was likely to be considerably higher during Jul-Mar FY19 as compared to the same period last year due to a shortfall in revenue collection, higher than budgeted interest payments and security related expenditures.
While current high frequency indicators point to a slowing in economic activity, this was expected to turn around in the course of the year on the back of improved market sentiments in the context of IMF supported program, a rebound in the agriculture sector and the gradual impact of government incentives for export-oriented industries.
Nevertheless, inflation is expected to fall considerably in FY21 as the one-off effect of some of the causes of the recent rise in inflation diminishes.
Future developments in export performance would also depend on growth rates of our trading partners and progress in alleviating domestic structural impediments. The FY20 budget sought to credibly reverse the recent trend of fiscal deterioration by addressing long-standing weaknesses in the taxation system and to enhance documentation of economic activities.
Going forward the MPC would be ready to take action depending on economic developments and data out turns. Reza Baqir, referring to the external sector, said the eternal conditions showed continued steady improvement with a sizeable reduction in the current account deficit which fell by