Hafeez Shaikh says bad days gone, Pakistan moving towards economic stability

ISLAMABAD: The Prime Minister's Adviser on Finance, Revenue, and Economic Affairs, Dr Abdul Hafeez Shaikh, said Sunday Pakistan's bad days were gone and the country was moving fast towards economic stability due to the Pakistan Tehreek-e-Insaf (PTI) government's timely and prudent measures.

Addressing a press conference alongside the chairperson of the Federal Board of Revenue (FBR), Shabbar Zaidi, and Finance Secretary Naveed Kamran Baloch here in the federal capital, Dr Shaikh said there had been considerable growth in exports, a 73 percent reduction in the current account deficit, stable foreign exchange reserves, and rupee-dollar parity.

Dr Shaikh said the stock market had also been stable for the last couple of weeks. At the same time, however, the overall revenue collection had also increased from Rs509 billion in the comparable period to Rs580 billion in the current year's first two months, translating into a growth of 25 percent.

Due to a decline in imports, revenues in that regard were decreased but domestic revenue collection surged 40 percent during the period, he added. The adviser said the fiscal deficit remained controlled during the first two months of current financial year as was evident from the fact that it was recorded only Rs24 billion during the period.

He said inflation rate was lower than the expectation and would hopefully come down further in next few months. The government had taken several measures — including no borrowing from the State Bank of Pakistan (SBP) — to control inflation, he added.

Aiming for zero circular debt by Dec 2020

"We have not borrowed even a single rupee from the SBP during first the two months (July-August) of current fiscal year," Dr Shaikh said. "The government had also fulfilled its pledge of clearing all the verified sales tax refund claims of around Rs22 billion, filed till 2015, which benefited some 10,000 people.

"The business community had lauded that initiative. The income tax refunds of up to Rs100,000 pending since 2015 have also been cleared," he noted.

The adviser explained that the government had introduced a new system with no human intervention to ensure immediate refunds to the exporters. Under the "faster" system, which has been operational since August 23, refund claims of the previous month would be cleared by 16th of the next month, he added.

Dr Shaikh said the government also expected collection of around Rs1 trillion non-tax revenues, of which Rs0.2 trillion would come from renewal of cellular companies' licenses, Rs0.3 trillion from the LNG terminal's privatisation (expected to be finalised by December), and Rs0.3 trillion as interest from the SBP.

Speaking of the power sector reforms, he said the circular debt — which had been reduced from Rs38 billion to just Rs10 billion per month — would be zero by December next year.

Dr Shaikh noted that by overcoming power theft and other losses, the government had saved around Rs120 billion.

On the stability phase, the adviser said the PTI government focused on the external sector after assuming the charge and reached an agreement with the International Monetary Fund (IMF), which was widely appreciated. It also engaged the World Bank and the Asian Development Bank (ADB), he added.

The adviser said the private sector, vulnerable segments of society, and ignored regions of the country were given special attention in the budget.

Confident of surpassing growth target

Moreover, the government also took austerity measures and reduced its expenditures by Rs50 billion, besides freezing expenditures of military and pay of high officials, he added.

As for the privatisation process, Dr Shaikh said the government had decided to hand over such public organisations to the private sector which could not be handled by the government departments.

Some 20 state-owned enterprises had been put on the priority list for privatisation, he added. "When I was privatisation minister back in 2006, the then government had privatised 34 SOEs," he said.

The adviser said the government was also mulling over privatising the profitable entities, including the National Bank of Pakistan (NBP) and State Life Insurance Corporation.

Dr Shaikh said the government was confident to surpass the growth target of 2.4 percent set for the current fiscal year (2019-20) as the economy was now moving forward on the right path after gaining stability on the external front during the past year.

The government was specially focusing on the development of agriculture sector, he said.

Over three percent growth was expected to be recorded by the end of current fiscal year in the sector, which remained totally neglected during the past regimes as evident from a negative growth of 0.8 percent during 2013-2018. He said the government was working hard for the public welfare.

IMF team's visit to Pakistan

The adviser urged the people to remain calm during the difficult time as the government had to take long-term difficult decisions for their betterment.

In response to a question, Dr Shaikh said the IMF team's visit to Pakistan was a routine matter. It had already been agreed between the two sides that it would visit Islamabad quarterly to review the economic performance.

In response to another question, Zaidi, the FBR chair, said the number of tax filers had increased by 0.6 million people from 1.9 million last year to 2.5 million this year. Rs6 billion was received from the new ones, he added.

Zaidi said the FBR had launched a mobile application through with the tax payers would be able to easily file their income tax returns and pay their taxes.