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“While market determined exchange rate improved export competitiveness, the financial incentives announced by the SBP and the government for remittance processors under the Pakistan Remittance Initiative (PRI) encouraged the use of formal banking channels for remitting funds by immigrants, paving the way for increasing inward remittance to $29.4 billion during the year.” The central bank said the country’s external indicators also improved significantly in FY21 as the SBP's foreign exchange grew more than 40% and the country's current account deficit plummeted to a 10-year low - mainly because of record high worker's remittances and export receipts. “The adoption of forward guidance on monetary policy by the SBP since January 2021 played a major role in reducing short-term policy uncertainty for stakeholders.” In addition, the SBP allowed bank's loan restructuring and loan deferment for firms including SMEs and households.įurthermore, the anchoring of inflation expectations, despite some upward pressures from supply management issues and surge in international commodity prices, allowed the Monetary Policy Committee (MPC) to keep the policy rate unchanged throughout the year. The SBP said export-related procedural requirements were relaxed to counter the limited mobility amidst unfolding national lockdowns and scope for concessionary Export Finance Scheme (EFS) was expanded. “To ease off the challenging business environment, the central bank swiftly introduced concessional refinance schemes to prevent layoffs (Rozgar Scheme) facilitate healthcare institutions to upscale their facilities (Refinance Scheme to Combat Covid-19) and encourage firms to undertake long-term investments (under the Temporary Economic Refinance Facility).” The SBP's quantitative measures were “well targeted, well diversified across beneficiaries and temporary in nature and in aggregate provided liquidity support of around 5% of the GDP”. Read SBP pumped $1.2 billion to defend rupee: WB Similarly, other key macro-economic balances including current account, fiscal balance and the country's foreign reserves improved during the FY21. Inflation also moderated to 8.9% in FY21 - well within the target range of 7-9% announced by the SBP. The economic growth rebounded to 3.94% during the year, well above the target set for the FY21 of 2.1% and Covid-19 induced contraction of 0.47% in FY20. “These measures helped address the imminent liquidity and solvency concerns of businesses and households that had been emerging since the virus outbreak in March 2020 and supported the better than anticipated economic performance during the FY21.” “The central bank's supportive monetary policy stance including quantitative measures to inject liquidity in a timely manner, supplemented by fiscal policy measures, provided a targeted, dynamic and well-coordinated policy response to Covid-19,” the statement read. The board of directors of the SBP also approved the annual performance review on the working of the central bank and its subsidiaries as well as the financial statements for the year ended June 30, 2021.
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“Amid such testing times, however, the country's economy rebounded strongly compared to the previous fiscal year as well as in comparison with the targets set for FY21 at the beginning of the fiscal year,” it said in a statement. The State Bank of Pakistan (SBP) has noted that FY21 remained a particularly challenging year as the global economy adjusted to the economic and financial challenges posed by the Covid-19 pandemic, including multiple waves of virus outbreak and ensuing containment measures.