Bloomberg News

Pakistan May Cut Benchmark Rate on June 21, Naved Khan Says

June 13, 2013

Naved Khan, chief executive officer of Faysal Bank Ltd., a Pakistani lender, comments on the central bank’s interest rate decision scheduled for June 21. He spoke in an interview in Karachi.

On monetary policy meeting:

“The market has already priced in a 50 basis points cut in the interest rate. Nawaz Sharif’s governments have always had two priorities; lower interest rates and a stable exchange rate.

Inflation is showing a downward slope. By virtue of this, there is room being built in for a cut. However, the central bank showed signs in the last statement that they don’t want to ease because of balance of payments pressure.”

On bond proposal to settle energy sector debt:

“It’s still circular debt if it’s turned into bank debt or government paper. It does not resolve the issue. The issue is how to decrease the speed of rising circular debt. There are two ways out, changing the industrial mix or selling electricity at cost. People will come out if prices are increased and energy mix will take at least three years to change.”

On tax collection:

“Beating a dead horse every time by increasing taxes will not resolve your issue, he won’t run faster. We need some draconian steps.”

On outlook for bank profits:

“Margins are already under pressure. I see this being a very difficult year. I think the big five banks will be hit the most. If I can grow or be where I am I would say I am lucky.”

To contact the reporter on this story: Faseeh Mangi in Karachi, Pakistan at fmangi@bloomberg.net

To contact the editor responsible for this story: Naween A. Mangi at Nmangi1@bloomberg.net


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