Prime Minister Shaukat Aziz on Monday said that owing to prudent macroeconomic policies and wide-ranging structural reforms Pakistan's economy continues to perform strongly.
Fiscal discipline has been maintained and consistency and continuity ensured that have contributed to a marked improvement in productivity and an increased confidence of consumers and investors, he added. The Prime Minister was chairing a meeting of the Monetary and Fiscal Policies Co-ordination Board held here.
Adviser to the Prime Minister on Finance, Deputy Chairman Planning Commission, Governor State Bank, Secretary General Finance Division, Principal Secretary to the Prime Minister and Economic Adviser of the Ministry of Finance attended the meeting. The Prime Minister said that a growing overall domestic demand should help support the growth at a robust level over the medium-term.
He also stated that Pakistan's economy in year 2006-07 has grown by 7.02 percent as against 6.61 percent in 2005-06. Shaukat Aziz said over the last five years the economy has maintained an average growth of 7 percent per annum and as such has positioned itself as one of the fastest growing economies in the Asian region.
The Prime Minister also stated that this year's growth has been broad-based as overall agricultural growth grew by 5 percent, large scale manufacturing registered a growth of 8.8 percent and services sector has grown by 8 percent.
Shaukat Aziz said that this year the production of wheat is estimated at 23.52 million tonnes - the highest ever in the country's history, which will immensely benefit the farmers in the country.
He said Pakistan's per capita income in 2006-07 has now increased from 833 dollar last year to $900. The strong performance of Pakistan's economy is a result of a better co-ordination between monetary and fiscal policies, he added. He appreciated the efforts of the State Bank of Pakistan (SBP) in keeping inflation on downward trajectory and also promoting economic growth.
The Prime Minister also appreciated the efforts of the Ministry of Finance for keeping budget deficit on target and supporting the efforts of the SBP to conduct its monetary policy. It is, therefore, essential that we must have good co-ordination between monetary, fiscal and exchange rate policies for which the Board provides an excellent forum, the Prime Minister said.
The Board reviewed the overall economic situation of the country and expressed its satisfaction. The Governor SBP presented the overall development on monetary side and explained her efforts to sterilise the monetary impact of large foreign inflows, which is helping in reducing core inflation in the country.
The Board was informed that overall inflation is on downward trend with average inflation for the first ten months of the current fiscal year stood at 7.9 percent as against 8 percent in the corresponding period of last year.
The meeting noted that core inflation has come down to 6 per cent and the tight monetary policy along with improvement in the supply situation of essential commodities will help reduce food inflation and overall inflation in the country.
The Board also reviewed the development on external sector and particularly noted substantial inflows in capital account which will not only finance this year's current account deficit, but also help in building foreign exchange reserves. The Board was also informed that strong inflows like remittances and foreign investment have helped in keeping exchange rate stable.
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