ISLAMABAD: Advisor to Finance Minister on Economic and Financial Reforms Khurram Schehzad, while painting a rosy picture of the economy, said that the cut in policy rate has benefited government by around Rs1.3 trillion in repaying debts.
Initially government had to return around Rs9.5 trillion while it would be now paying back only around Rs8.5 trillion, said the advisor while briefing media on economic indicators here on Monday, who further said that government was bringing economic discipline while dealing with International Monetary Fund (IMF).
The advisor admitting challenges including in social sector, population growth as well as health and education, stressed on structural reforms for long term stability in the country, increased spending on social, education and health sectors.
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Schehzad also underscored the needs for decentralisation of power while devolving more responsibilities to provinces in the light of the 18th constitutional amendment.
He said that strong plan needed to be implemented in collaboration with provincial governments, which would unlock the potential.
Talking about the latest economic development in the country, the advisor said the country’s economy has made a remarkable improvement as indicated by economic indicators, including fiscal balance that swung into a surplus of Rs1.8 trillion in the first quarter.
The advisor said the country’s fiscal deficit has been transformed into a 1.5 per cent surplus, a significant improvement from last year’s around one per cent deficit during the same period. This achievement marks the first fiscal surplus in 24 years, the advisor added.
Schehzad attributed the turnaround to effective management of revenues and expenditures, saying that in the first quarter, the fiscal balance was in surplus, with revenues increasing and expenditures being controlled.
The advisor also highlighted the improvement in the current account balance during July-October of the current fiscal year, which has turned into a surplus of around $218 million during the first four months of the current fiscal year.
Khurram said exports have shown an eight per cent increase, reaching $13 billion in the July-October period, up from $12 billion during the same period last year.
He said, the primary surplus has also witnessed noticeable improvement in first quarter as compared to last year, adding the primary surplus was recorded at 2.6 percent of GDP compared to just 0.4 percent last year.
He also mentioned that the tax to GDP ratio has improved during the first quarter, from 2.1 percent last year to 2.2 percent, expressing the hope that with improved tax collections, compliance and enforcement would help further improve the tax-to-GDP ratio.
The advisor, the inflation has also slowed down to average 8.7 percent during the period against 29 percent last year.
He said, the government’s ability to borrowing has also improved and it can now borrow on its own conditions.
Khurram said, rupee, which witnessed around double depreciation during past four years, appreciated by four percent during past one year, giving positive signals to creditors and investors.
The country’s foreign exchange reserves (held by SBP) have also witnessed a significant increase of 57 per cent, rising from $7.18 billion last year to $11.3 billion during the first four months of the current fiscal year.
The Pakistan Stock Exchange (PSX) has also shown positive developments, indicating a favourable outlook for the economy.
He said, keeping in view these positive development, the rating agencies including Moody’s and Fitch have also improved ratings of the country adding that Moody also improved Pakistan’s outlook from stable to positive, which indicates that economic outlook of Pakistan would remain positive in years to come.
Copyright Business Recorder, 2024
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