ISLAMABAD - Monetary and Fiscal Policies Coordination Board on Friday expressed concern over high current account deficit, which was recorded at $10.83 billion during first eight months (July 2017 to February 2018) of current fiscal year 2017-18.
The country’s current account deficit widened by 50 percent to stand at $10.83 billion during the above mentioned period compared with $7.22 billion in the same period of previous year. The board called for effectively tackling high current account deficit. It was noted that exports are improving, imports have slowed down, while remittances and FDI are also improving.
The Adviser to Prime Minister on Finance, Revenue and Economic Affairs, Dr Miftah Ismail chaired the meeting of Monetary and Fiscal Policies Coordination Board on Friday. The meeting was also attended by the deputy chairman of Panning Commission, finance secretary, governor SBP, acting secretary commerce and Dr Ishrat Hussain, Director IBA Karachi/ex-governor SBP.
The PM’s adviser on the occasion said that the meeting provides an opportunity to review the current economic situation for bringing consistencies in monetary, fiscal and exchange rate policies and ensure consistency among macro-economic targets of growth, inflation, fiscal, monetary and external accounts. He added that Pakistan’s economy was performing well despite some challenges and moving on the path of growth. Consistency in upward growth trajectory is a reflection of government’s development oriented policies. Secretary Finance presented a detailed briefing on the economic and fiscal situation. He informed that agriculture, industrial and services sectors have picked up growth on the back of supportive growth oriented policies. Inflation has been contained at 3.8 percent during first nine months of current year on account of effective monetary policy along with better supply of commodities. Large scale manufacturing (LSM) sector also recorded an impressive growth of 6.3 percent during first seven months of the current year. High demand of cement and better sugar production will further improve growth. It was also informed that sectors like electronics, iron and steel products, automobiles, non metallic mineral products, coke & petroleum products, paper & board, rubber products, engineering products, pharmaceuticals, food beverages & tobacco and textile are showing better performance.
The exports are continuously increasing and have registered a growth of 12.2 percent during first eight month of the current year as compared to a negative growth of 1.5 percent last year. Likewise, increase in imports has been contained at 17 percent compared to 48 percent at the start of the current year on account of proactive measures. Remittances and FDI are also improving while FBR revenues are showing better performance. The governor SBP apprised the meeting that broad money (M2) witnessed a cumulative growth of 2.9 percent during 01 July-23 Mar FY18 as compared to a growth of 4.7pC in the same period last year. The actual outcome of inflation is below expectation while external sector especially current account deficit is higher than expected. The impact of two episodes of exchange rate depreciation is likely to be seen in the coming months, which may improve the current account.
The Board members deliberated on various measures to enhance foreign exchange inflows. The Board emphasized to increase IT exports as well as enhancing measures to export food, vegetables, meat and in this connection ensure compliance of SPS obligations. The board also resolved to continue its works to have meaningful deliberations for a sustained and improved economy.