SBP’s Performance Since 2018 Chapter 2: SBP’s Performance Since 2018 The State Bank of Pakistan(SBP) is the central bank with the responsibility of conducting monetary policy in the country. According to Section 4B of the SBP Act of 1956 the primary objective of the Bank shall be to achieve and maintain domestic price stability. The 1956 Act says that without prejudice the Bank’s primary objective, the Bank will contribute to the stability of the financial system of Pakistan. The Bank shall also support the Government’s general economic policies to foster the development and fuller utilization of Pakistan’s productive resources. According to the Act the key functions shall be to: A Determine and implement monetary policy B Formulate and implement the exchange rate policy C Hold and manage international reserves of Pakistan D Issue and manage the currency of Pakistan E License, regulate and supervise scheduled banks In early 2022, the new SBP amendment Act has been promulgated with greater autonomy and exclusive focus on price stability. The objective of this special report is to assess the performance of the SBP since 2018, after the induction of the PTI government. This chapter has the following sections. Section 2.1 describes the state of the economy in 2017-18 prior to the induction of the PTI Government. Section 2.2 highlights the financial stabilization policies adopted by the SBP in 2018-19. Section 2.3 then describes the continuing search for financial stability. Section 2.4 highlights the positive role played by the SBP in the aftermath of COVID-19 attack. Section 2.5 quantifies the macroeconomic impact of monetary policy since 2018-19. Finally, Section 2.6 focuses on the incipient financial crisis that Pakistan faces today, and the role being played by the newly autonomous SBP along with other complementary actions that are required on a priority basis to avert a full-fledged crisis. 2.1 State of the Economy in 2017-18 The key macroeconomic magnitudes in 2017-18 are given below in Table 2.1, in the year prior to the induction of the PTI Government. 25