(Adds detail from statement, background)
KARACHI, Pakistan, March 25 Pakistan's central
bank maintained its main policy interest rate at 5.75 percent on
Saturday, the bank said in a statement, citing stable inflation
expectations and the gathering pace of economic activity.
The move highlights the generally positive direction in the
economy in Pakistan since the country emerged from an economic
crisis just over three years ago with a reform programme backed
by the International Monetary Fund (IMF).
"The real economic activity continues to gather pace at the
back of better agricultural output, increase in key large-scale
manufacturing sectors, and a healthy uptick in credit to the
private sector," the central bank said in a statement.
Domestic demand was showing signs of improvement with recent
consumer sentiment surveys pointing to further increases in
consumer demand this year, the statement said.
Low and stable market rates led to a pick up in borrowing by
the private sector for both investment and consumer financing.
The stronger economic picture spurred investments but
exports, a persistent weak spot, did not have any sustained
improvement. Together with a small decline in remittances, this
pushed the current account deficit to $5.5 billion in the
July-February period, the bank said.
But the central bank said that it expected the current
account deficit to be contained by recent steps to boost exports
and limit non-essential imports.
Government reforms of the power sector, together with tax
and revenue measures designed to close loopholes and broaden the
tax base have strengthened the economy.
However, the IMF says the government must focus on further
increasing tax revenues and boosting economic growth and private
(Reporting by Rasa Hassan; Writing by James Mackenzie; Editing
by Christian Schmollinger)