Financial Risk Manager

Ways of Financial and Risk Management

State Bank raised Discount Rate by 50 basis points to 13.50 percent in the Monetary Policy Statement (MPS), effective from September 30th.Thus Repo market would operate in the range of 10.50 percent &13.50 percent.

Economic growth for FY-11 can be down to 2.50 percent from 4.50 percent.Food inflation which reached 15.60 percent in August, would take two to three months before it reached to normal level. CPI Inflation could stay between 13.50 & 14.50 percent but anticipated rise in electricity prices, imposition of reformed GST and government’s reliance on SBP for borrowing will have implications on inflation expectations. To bring it down government will have to exercise fiscal discipline along with broadening of tax base.

Government borrowed Rs 220 billion during July 1st –Sept 24th which is against the spirit of macroeconomic stabilization program.

Imports began to surge again after contraction of 2.30 percent in FY- 10 and post floods scenario might lead to double digit increase in imports. Furthermore, SBP’s foreign exchange reserves and exchange rate would be under severe pressure if external current account deficit widen.