Sunday, May 19, 2024
HomeLatestThink Tank Exposes Pakistan State Bank's Indirect Loans

Think Tank Exposes Pakistan State Bank’s Indirect Loans

Date:

Related stories

Trudeau’s Troubles: Navigating Canada’s Economic Decline

Canada is facing a significant economic challenge as job...

Hotter World, Harder Lives: The Global Cost of Extreme Heat

Extreme weather events, including heatwaves, floods, and droughts, are...

Election Heat: How Pakistan Dominates Modi’s Campaign

Prime Minister Narendra Modi’s political strategy frequently leverages Pakistan...

Sanctions and Strategy: China and Russia’s Economic Resilience

In recent years, the strategic partnership between China and...

Türkiye’s Rising Influence After Israel-Hamas Conflict

In the aftermath of the recent Israel-Hamas conflict, Türkiye...
spot_img

In a damning report, the Policy Research Institute of Market Economy (PRIME) reveals how the State Bank of Pakistan’s purported reforms fail to curb its indirect lending to the federal government, exacerbating economic woes.

 

The State Bank-Ministry of Finance Nexus:

PRIME’s report, “Pakistan Economic Freedom Audit: The Sound Money,” sheds light on the detrimental impact of the State Bank’s collaboration with the Ministry of Finance. This collusion fuels inflation and escalates national debt, despite amendments aimed at curbing such practices.

Persistent Financial Intervention:

Despite regulatory amendments, the State Bank’s financial interventions persist. By providing liquidity to commercial banks via open market operations, the State Bank indirectly facilitates government borrowing, totaling Rs 10.3 trillion.

Counterproductive Policies:

The report underscores the paradoxical nature of policy decisions. While policy rates are adjusted to control inflation, the State Bank’s indirect lending inflates the money supply. Consequently, rather than curbing inflation, these actions amplify the government’s interest obligations.

Printing Press Woes:

Critically, the State Bank’s strategy involves printing currency notes, which are then funneled to commercial banks. These banks, in turn, extend high-interest loans to the government, exacerbating fiscal challenges.

Indirect lending mechanism:

PRIME’s revelations cast a shadow over the efficacy of State Bank reforms. The persistence of indirect lending mechanisms underscores the need for more stringent regulatory oversight to safeguard economic stability.

NEWS DESK
NEWS DESKhttp://thinktank.pk
News Desk, where most of the News Item edit for THE THINK TANK JOURNAL editor@thinktank.pk

Latest stories

Publication:

spot_img

LEAVE A REPLY

Please enter your comment!
Please enter your name here