Response

Anjum Ibrahim has written an article "The marriage between politics and economics" published in Business Recorder on 09-11-2015. Among various political issues the writer has again raised the issue of Pakistan's foreign exchange reserves and referred a Bloomberg article which has stated that Pakistan reserves mask risks of needing more IMF aid.
The country's reserves position has been strengthened through continued inflows from IFIs on account of better image built up during a short period of time coupled with lower oil prices also provided cushion to the government. It is important to mention that most of the loans are of long-term maturity, 10 year or more and there is no pressure on the reserves given that there is a continued strong inflow of multilateral support, remittances and gradually improving flows from foreign direct investment.
The writer should understand that when the present government took charge, the total reserves stood at $11.02 billion, net reserves with Banks were $5.01 billion and with SBP were $6.01 billion. Because of forthcoming payments and uncertainty about the future, these had further depleted to $7.75 billion, with $5 billion with banks and $2.75 billion with SBP. It owes to consistent and credible reforms implemented by the present government that the reserves reached a historical level of around $20 billion. It is worthwhile to mention that the present government has also made repayments of approximately $9.0billion. The IMF has also acknowledged that the country has met the end-September 2015 quantitative performance criteria on SBP's net international reserve.
The fear of the author regarding surge in oil prices seems baseless and premature as energy prices dropped by 17 percent in the third quarter of 2015 and expected to fall further or at least remain stable at present lower prices with the entry of Iran after lifting of sanctions.
The author has also raised the issue of shortfall of revenue collection by FBR of Rs 40 billion. It may be noted that during the month of October 2015, 22 percent rise in revenue collection has been observed as compared with October 2014. Going forward, the government is already making efforts to broaden the tax net to overcome the short fall in revenue collection.