ISLAMABAD - Pakistan has more than enough reserves to cover dues of International Monetary Fund (IMF) as most of debt is owed to international lenders.

This was stated by Governor State Bank of Pakistan (SBP) Yaseen Anwar while addressing the 26th SAARC Finance Group Meeting and Governors’ Symposium on ‘The impact of EU crisis on South Asian economies’ here on Tuesday.

“In fact, our largest concern right now is the repayment of IMF loans, however, as of now, we do have more than enough reserves to cover our dues to the IMF”, he remarked. He said that possibly our greatest concern would be the impact of a persistent recession in Europe on our current account balance. Well firstly, most of our exports consist of low value added final products, whose demand is relatively inelastic.

He said that Pakistan has one of the lowest unit prices for these products in the region and most of our trade is actually with other Asian countries therefore, our exports will not be significantly affected by a fall in demand from Europe.

The SBP head said that the implications of that are straight forward, as demand for our goods and services from the continent will not rise, inflows from Europe to finance our external accounts are likely to be few and far between and our financial system will have to be wary of its exposure to European sovereign securities.

On the other hand, as investors look to pull out of Europe, they would be interested in this region. As developing markets, we have the potential to offer them a safer, and a higher rate of return on their investments.

However, he said that at least in the case of Pakistan, there is an urgent need for structural reforms before we can be in a position to attract inflows from foreign investors looking to limit their exposure to Europe.

Remittances have grown strongly despite the current slowdown in the rest of the world as well. The Pakistan Remittance Initiative (PRI), which has been a joint initiative of the State Bank, the Ministry of Finance, and the ministry of overseas Pakistanis, has been instrumental in increasing the volume of remittances. It is also a great example of how most of the economy’s problems are domestic and not international in nature.

Addressing the conference, former Governor SBP, Dr Ishrat Hussain said that EU debt crisis has had a very little impact in the SAARC economies but our own polices and stances have done more harm, adding that external risks from EU have diminished.

He called upon the regional countries to revisit the issues including subsides on fuel, goods and fertilizers which are not targeted and widening the fiscal deficits.

He stressed the need to remove the infrastructures bottlenecks and energy shortages, corruption, weak governance and domestic policy uncertainty, social security concerns and social unrest.

Dr Ishrat said that intensification of Euro area debt tension in mid 2012 did cause some weakening of exports across the region, as regional exports fell by 4 percent in US$ terms.

He informed that a recent IMF study confirms that emerging markets and developing economies (EDEs) are performing better than the advanced economies.

Dr Hussain said that South Asian countries have done remarkably well in rising the per capita incomes of their population as it grew by an average 6 percent during last 20 years. He said GDP growth rate is expected to resume its trajectory with 5.2-6 percent and 6.4 percent in the next three years, adding that EU economy is expected to stabilize in the first half of 2013 and its GDP growth is projected to turn positive gradually in the second half of the in 2014.

He called upon the regional countries to develop the public-private partnership to minimize dependence on government resources.