Finance Minister Asad Umar has said the Government is committed to improving the fundamentals of economy and achieving sustainable and balanced economic growth.
The Minister stated this while chairing meeting of the Monetary and Fiscal Policies Co-ordination Board here on Thursday.
Secretary Finance gave a detailed presentation to the meeting on the economic and fiscal situation. The meeting was informed that external balance has improved in the first four months of current fiscal year as current account contracted by 4.6 percent due to significant increase in worker’s remittances, containment in imports and increase in export growth.
Fiscal consolidation remained a challenge during the first quarter as fiscal deficit increased to 1.4 percent as compared to 1.2 percent of the comparable period last year. FBR revenue continued to increase by 6.4 percent and if gains traction it may bridge up the fiscal deficit going forward. Headline inflation is increasing on the back of non food inflation above 8 percent, whereas, food inflation is rising moderately by 2.7 percent on account of smooth supply of commodities in the market and better price monitoring system.
The Secretary also briefed the meeting about the economic reforms which the Economic Advisory Council has approved. The meeting also discussed the export credit facility offered by Saudi Arabia envisaging the purchase of crude oil and or other petroleum product (s) of up to USD 3.24 billion per annum on a 12 month deferred payment basis.
Governor State Bank discussed monetary aggregates along with views on the economy. Broad money (M2) witnessed a rise of Rs.35 billion from July 2018 to 16th November 2018 as compared to decrease of Rs.67 billion in the same period last year which is entirely contributed by Net Domestic Assets (NDA) of the banking system as Net Foreign Assets (NFA) continued to contract. Despite rising interest rate overall private sector credit remained higher than last year. The government borrowed Rs.2,859 billion from SBP but on the other hand retired Rs.2,619 billion to scheduled banks. While, net government borrowing from the banking system reached Rs.186.5 billion compared to Rs.383.5 billion over the previous year. The private sector credit increased to Rs.304 billion during the period as compared to Rs.69 billion last year. Expansion is seen largely in working capital followed by fixed investments.
Giving his concluding remarks, Finance Minister said that the decline in LSM sector needed to be studied by disaggregating the data so that appropriate measures could be taken to address the same. He also directed Finance Division to earnestly complete integrated policy paper focusing on economic strategy over the medium term.
The meeting was also attended by the Minister for Planning Development and Reforms, Governor SBP, Finance Secretary, Secretary Commerce, and Vice Chancellor PIDE.