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 have decreased during the first quarter of financial year 2019-20, said Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh while addressing a press conference on Saturday.
The adviser said the 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 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 the revenue collection witnessed about 16 percent growth during the period under review, adding the government has not borrowed any money from the State Bank of Pakistan nor released any supplementary grant in order to ensure strict adherence to the 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 Rs 1,600 billion as against the set targets of Rs 1,200 billion.
Dr Shaikh said billions of dollars were wasted in the past in order to artificially keep the exchange rates stable. He said the present government has introduced market-based exchange rates due to which it is stable from last three months and foreign reserves have witnessed significant increase.
The net portfolio investment has increased by $340 million which also helped in restoring the confidence of foreign investors, he said, adding the exports which were stagnant from last five years have also started growth. He said the overseas employment witnessed increase of over 150,000, as during the 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 was also restored in stock market, as it showed 22 percent growth and the index reached 34,000 points.
Dr Shaikh said all the measures introduced by the government aim at bringing the prosperity and welfare to the life of the common man and the results of all these measures will ultimately benefit the common man in the country. Replying to a question, he said the government has also made appropriate releases for the developmental projects under PSDP and released extra funds as compared to the last year.
To another question, he said small and medium enterprises sector is vital for economic development of the country, adding the government will introduce SMEs policy during the next two weeks and announce facilities for small and medium enterprises. Regarding the Financial Action Task Force (FATF), the adviser said all the national institutions are making their all-possible efforts for making the full compliance of FATF as it is in the larger interest of the country. He said measures have been taken to make full compliance of all the points of FATF and most of those have already been done and the country is determined to come out of the grey list as soon as possible.
Recalling the economic challenges, Dr Hafeez said when the government assumed power, the country was passing through crucial economic challenges. The national debt had swollen to Rs 30,000 billion and it was facing the historic current account deficit with unstable exchange rates, he said, adding that the local exports were decreasing while the imports were increasing and local foreign exchange reserves were swiftly depleting. “In such a time, the government 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 went on to say, the government entered into agreements with friendly countries and raised its foreign exchange reserves to $7 billion. He said several measures were taken to enhance revenues and about 800,000 new taxpayers were brought under the tax net.
Speaking on the occasion, FBR chairman said fruitful negotiations with the ministry of finance of UAE were held that will help in identification of potential taxpayers in the country. He said negotiations with traders are in progress, adding that so far over 40 meetings have taken place and that all the issues will be addressed amicably.