ISLAMABAD: Minister for Finance Miftah Ismail stated on Thursday that the reform measures to be announced in the budget today (Friday) for the next fiscal year would make easier staff-level agreement with the International Monetary Fund (IMF) to bring the stalled Extend Fund Facility (EFF) back on track.
Addressing a news conference along with Minister for Planning Ahsan Iqbal, Minister for Power Khurram Dastgir and State Minister for Finance after the launch of Economic Survey 2021-22, the finance minister said that negotiations with the IMF are continuing and staff-level agreement is expected after the announcement of the budget.
The minister sounded optimistic that the reforms to be undertaken in the budget would be adequate for the revival of the programme.
Miftah Ismail said that the growth rate for the outgoing fiscal year was 5.97 per cent as against 4.8 per cent. As usual, when there is growth in the country, the current accounts run into deficit.
He said once again the current account deficit has gone out of control and the balance of payments crisis has become a problem as imports are likely to remain between $76-77 billion, 48 per cent higher against a 28 percent growth in exports and now exports cover only 40 percent imports bill and remaining 60 percent import bill is being met by remittances and loans, which creates a problem of balance of payments.
This was evident from the country’s foreign exchange reserves which after a decline of US$6 billion have dipped below US$10 billion. He said that reserves would increase to $12 billion by early next week after rollover $2.4 billion Chinese loans.
The minister emphasized the need to set the direction of the economy right and stated that the country needed sustainable and inclusive growth to benefit all the segments of the society and not one segment only.
He said that the government’s difficult decisions have averted the default and the economy is now on the path of stability and will soon see stable growth wherein there would be no current account deficit and balance of payments problem.
He said that sharp increase in petroleum products prices in the international marketing between $120 to $130 per barrel have been making the thing (commodity linked of dependent on it) every expensive and censored the previous government of being unfair in announcing Rs10 per litre petrol after knowing that it would no longer remain in power and laid landmines for the incoming government and damaged the country.
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He said that the previous government also failed to improve the tax-to-GDP ratio, which in fact was declined from 11.1 percent in 2017-18 to 8.5 percent now, adding that the country’s tax-to-GDP and exports as percentage of the GDP should not be less than 15 percent.
The minister said that the budget deficit would be Rs5 trillion in the current fiscal year and debt servicing in the next year is projected at Rs3.9 trillion.
Federal Minister for Planning, development and Special Initiatives Ahsan Iqbal said that the previous government slashed the Public Sector Development Budget to Rs500 billion from what was announced by the PML-N government in 2018 of Rs1,000 billion.
He said the private sector investment in Pakistan depended on the money invested by the government in the public sector development projects and regretted that the previous government of the PTI had not released any fund in the last quarter of the ongoing fiscal year for development projects.
Iqbal criticised the former government for damaging the CPEC projects and stated that nine Special Economic Zones were to be established but the previous government failed to start work on five zones in the last three and a half year.
He added that the PML-N has also expedited the work started by the PTI on dam projects. He added that industrial development, transport and communication were being focused on in the upcoming year.
Power Minister Dastgir said the previous government failed to add electricity to the national grid, whereas, it was required 8,000MW in the system through new projects to meet the growth.
Replying to questions, Miftah said the economic growth through upgrading the agriculture sector would be sustainable and that the government would also increase the salaries of the government employees in the budget to offset the impact of an increase in inflation.
Replying to questions, Minister for Planning, Development and Reforms Ahsan Iqbal said that the power policy was there but no was ready to invest in the country’s power sector even at the prescribed percentage rate of return due to the law and order situation.
He said that the prime minister is ambitious about growth.
Miftah said that government would announce about tax exemption cut in the budget for the next fiscal year. When he was asked whether the Fund had any concern about the payment to the IPPs set up by Chinese companies, he said that about fuel payment of the IPPs no one should have any issue.
Copyright Business Recorder, 2022
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