ISLAMABD: Adviser to Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh has said an International Monetary Fund (IMF) mission will be arriving in Pakistan in the next few weeks, and discussions will be structured how to move ahead on revenue mobilisation and power sector reforms. Speaking at a news conference along with Minister for Information and Broadcasting Senator Shibli Faraz, the adviser also revealed that fiscal deficit during the four months of the current fiscal year stood at Rs758 billion, and stated that the basic understanding with the IMF was how to move ahead insofar as increase in tax collection and improvement in power sector were concerned.
The Fund mission would give a formal structure to the ongoing discussions before bringing back on track the stalled Extended Fund Facility (EFF) programme.
“We have got relief from the IMF due to coronavirus that was not in the original programme,” Shaikh said and added that the Fund had been cooperating with Pakistan, which had also provided a $1.4 billion rapid financing instrument (RFI) to the country.
The adviser said that Pakistan’s relations with the IMF were of important nature, and discussions on tax collection from the rich, better management of debt, and reducing expenditure, were being held with them on a daily basis.
The adviser said the government had been working hard, and the prime minister was himself overseeing the power sector with a view to improving the energy mix by increasing the shares of solar, hydel and wind in the energy basket and increasing the performance of distribution companies. The PM was also focusing on old power contracts, the adviser added.
The adviser also revealed that fiscal deficit for the first four months stood at Rs758 billion.
The country’s debt was Rs36.4 trillion in June 2020 and stood at the same level in October 2020 as well and this happened because of increase in revenue and expenditure management. The increase was however offset by appreciation of the rupee against the dollar.
The adviser said the economy was picking up after a five percent growth in the LSM, increase in cement production from 16 million tons to 30 million tons, textile orders booked till December 2020, and the rupee not only getting stable but also appreciating.
He said that to increase the domestic investment, cheap electricity, gas and loans had been provided, while the government was optimistic about job creation as 100 big companies’ profitability witnessed an increase of 26 percent while the banking sector recorded over 56 percent profitability. The future prospects of country’s economy as reflected in indicators were very positive, he added.
The adviser said that there was stability on external side as well.
Shaikh said that foreign companies were seeing Pakistan as a destination for investment as the FDI increased to $733 million during July-October 2020.
The adviser also claimed that electricity and gas prices were not allowed to be increased; instead surplus electricity was provided at less cost, and the government had been sharing electricity cost of 72 percent and of gas of 92 percent.
The adviser also mentioned that to deal with the wheat shortage, this essential commodity was imported, Rs50 million subsidy was provided to the USC, and 40,000 tons of wheat was being released by the provinces on a daily basis Ehasaas programme allocation was doubled to Rs192 billion, and the number of beneficiaries was increased to seven million from 4.5 million.
On the fiscal side, the FBR collection was Rs1,340 billion during the first four months.
The government’s focus has been on creating employment opportunities, and incentives have been provided to the construction sector, the size of Public Sector Development Plan (PSDP) was expanded, new projects were being initiated for under-developed areas, and an allocation was made for Kamyab Nujawan Programme.
The adviser, in response to a question, said, “export-related refunds are being cleared through faster system within 72 hours without any human interaction with tax officials, and so far, during the first four months of the current fiscal year, 128 billion refunds have been cleared.”
The adviser claimed that “historic refunds” of Rs250 billion were cleared during the last fiscal year.
“We have also decided to clear up to Rs50 million income tax refunds,” the adviser said, and added that the government decided to provide Rs40 billion from budget in this regard.
“The government went to the IMF after inheriting a poor economy. Economic indicators were improving before the Covid-19, however, like other countries the pandemic adversely impacted Pakistan as well. The government announced Rs1,240 billion stimulus package to provide relief to the poor in terms of electricity and gas bills as well as loans to the industries besides a historic cash transfer to 15 million people across the country.
The adviser said the government reduced the current account deficit from $20 billion $3 billion, and then to $700 million surplus, and the expenditure of Prime Minister’s Office and the Presidency were reduced, and the armed forces budget was frozen that helped the government achieve primary balance in surplus.
The government also carried out debt servicing of Rs5,000 billion for the past loans, and there is no increase in the country’s debt during the last four months.
“Pakistan is a democratic country and the people have freedom to express their view points, and when one is in the government, he has to tolerate criticism,” Minister for Information Shibli Faraz said and added that all the economic indicators were moving in a positive direction and “feel good factor in the market is reflected in the stock market performance, foreign investment inflows, and large scale manufacturing”.
As far as the opposition’s protest is concerned, it does not want to allow the government to make progress on the economic front, he added.
Copyright Business Recorder, 2020
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