IMF mission likely to visit Pakistan to discuss tax reforms, power sector

ISLAMABAD: The federal government is hopeful that the upcoming visit of an International Monetary Fund (IMF) mission will lead to the resumption of the bailout programme.

Flanked by Federal Minister for Information Shibli Faraz at a press conference, Advisor to the PM on Finance Dr Abdul Hafeez Shaikh said a staff mission of the lending body was due to arrive in the country within the next few weeks to discuss raising tax revenues and power sector reforms.

Inflation

Shaikh said the Pakistan Bureau of Statistics showed declining trends for food inflation in the past three weeks. He said importing wheat due to a shortage of 2-2.2 million tonnes had brought down the price of the commodity and asserted that the government was making efforts to further reduce inflation.

Public debt

The advisor claimed no increase was witnessed in Pakistan's public debt in the past four months. "It stood at Rs36.4 trillion on June 30 2020 as well as October 30 2020," he said. “It demonstrates that the government was ensuring strict financial discipline."

According to The News, keeping in view the windfall gains achieved through the appreciation of rupee against the dollar in recent months, the public debt remained stagnant in rupees in the four-month period mentioned above.

Independent economists said against the first four months when the country witnessed budget deficit, this recovery could be simply termed as jugglery of figures. Otherwise, the government would have to borrow to finance its deficit.

Shaikh said the administration brought down the current account deficit from $20 billion to $3 billion last year and has paid Rs5,000 billion as interest on public debt in the past two years.

Economy picking up

Referring to the 5% growth in Large Scale Manufacturing sector, the finance advisor asserted "clear signs of economy picking up". He added that the cement dispatches stood at 16 to 20 million tonnes while auto, fertiliser, and other sectors were also showing growth. "Textile orders are available till December 2020," he added.

Rupee and taxes

Shaikh said the rupee remained stable, foreign exchange reserves touched $13 billion and the Federal Board of Revenue surpassed its four-month target by fetching Rs1,340 billion. He said the government paid back Rs128 billion in refunds in the first four months against Rs50 billion during this period of the last fiscal year.

Defence spending is frozen

The external and internal front of the economy have improved, expenditures slashed down and no supplementary grant was approved for fiscal discipline, he said and added that the borrowing from the SBP was brought to zero.

The expenditures of PM, President Houses, and ministries were also slashed down while defence spending was frozen. “The primary balance has been achieved in the first four months of the current fiscal year,” he added.

All these measures, he said, were aimed at bringing relief for the common people.

Jobs

He said that efforts were underway for creating more job opportunities and he mentioned that the construction package and Kamyab Jawan Program were launched with the allocation of Rs100 billion for providing loans to youth.

FDI

The foreign direct investment, he said, fetched $733 million in the first four months of the current fiscal year. The 100 biggest companies earned profit by 36% while banks' profits went up by 56%.

KSE-100 Index

Shaikh said the Pakistan Stock Exchange performed well, indicating that the economy was on the path of growth. He warned, however, that the second wave of Covid-19 pandemic was posing a risk for the economy.