Oct 12: Owing to the tough economic reforms introduced by the government, twin deficits including current account and fiscal deficit have significantly reduced, imports increased whereas exports decreased during first quarter of financial year 2019-20.
This was stated by Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh while addressing a press conference on Saturday. The Chairman Federal Board of Revenue (FBR) Shabbar Zadi and senior official of the Ministry of Finance were also present.
The Adviser said that those economic reforms have gradually started bearing the results and all the macro-economic indicators showed resilience during first quarter of current financial year. He said that owing to these reforms, the current account deficit shrank by 35 percent as it came down from $9 billion to $5.7 billion in first quarter of financial year 2019-20.
The fiscal deficit also witnessed 35 percent reduction in first-three months of current financial year due to the steps taken by the government and it also came down from Rs 738 million to Rs 436 billion, he added.
Hafeez Shaikh said that revenue collection had witnessed about 16 percent growth during the period under review, adding that the government had not borrowed any money from the State Bank of Pakistan nor released any supplementary grant in order to ensure strict adherence of fiscal discipline.
The non-revenue income also registered about 40 percent growth compared to the same period of last year and achieved Rs 406 billion, adding that non-revenue income was expected to reach at Rs1,600 billion as against the set targets of Rs1,200 billion.
Dr Shaikh said that billion of dollars were wasted in past in order to artificially keeping the exchange rates stable. He said that the present government had introduced market based exchange rates and due to which it was stable from last three months and foreign reserves had witnessed significant increase.
The net portfolio investment was increased by $340 million which had also help in restoring the confidence of foreign investors, he told and added that exports which were stagnant from last 5 years had also started growth.
He said that overseas employment witnessed increase of over 150,000, as during last year from January-August, about 224,000 Pakistanis went abroad as against the 373,000 during current year.
He said that the investors' confidence were also restored in stock market, as it had showed 22 percent growth and the index had reached to 34,000 points.
Dr Shaikh said all the measures that have been introduced by the government aiming at to bring the prosperity and welfare in the life of a common man and the results of al these measures would ultimately benefit the common man in the country.
Replaying to a question, he said that the government has also make appropriate releases for the developmental projects under PSDP and released extra funds as compared to last year.
To another question, he said that small and medium enterprises sectors was vital for economic development of the country, adding that the government would introduce SME policy during next two weeks and announce facilities for small and medium enterprises.
Regarding the Financial Action Task Force (FATF), the Adviser said that all the national institutions were making their all possible efforts for making the full compliance of FATF as it was in the larger interest of country. He said that measures have been taken to make full compliance of all the points of FATF and most of those have already done and the country was determined to came out form the gray list as soon as possible.
Recalling the economic challenges, Dr Hafeez said that when the government assumed powers, the country was passing through crucial economic challenges.
The national debt swelled to Rs30,000 billion and it was facing the historic current account deficit with unstable exchange rates, he added. He said that the local exports were decreasing, while the imports were increasing and local foreign exchange reserves were swiftly depleting and it was under immanence pressure.
In such a time, the government had introduced the economic reforms agenda and under its reforms measures, the defense expenditures were freezed, expenses of the civil government cut down by Rs 40 billion and expenditures of the Prime Minister Office slashed down, he added.
Besides, he said that the government entered into agreements with friendly countries and raised its foreign exchange reserves up to $7 billion for strengthening its foreign exchange reserves. He said that other measures took to enhance revenues and about 800,000 new taxpayers brought under the tax compliance net.
Meanwhile, the government had also introduced measures for local industry to enhance the local exports and provide special subsidy on electricity and gas that would help in industrial growth, producing the export surplus and help in job creation, he added.
Speaking on the occasion, the Chairman FBR informed that fruitful negotiations with the Ministry of Finance of UAE was held that would help in identification of potential tax payers in the country. He informed that negotiations with traders were in progress, adding that so far over 40 meeting had taken place and all the issues would be addressed amicably.