ISLAMABAD

Finance Minister Senator Ishaq Dar on Tuesday suggested that country should have Charter of Economy just like Charter of Democracy for continuity and consistency of economic policies.

He made these remarks while chairing a meeting of the Monetary and Fiscal Policies Coordination Board. Other members of the Board present in the meeting included Federal Minister for Planning, Development and Reforms, Federal Commerce Minister, Governor SBP, Secretary Finance, Dr Ishrat Hussain Director IBA and Dr Asad Zaman, Vice Chancellor PIDE.

The finance minister highlighted that it is an important body and we have planned to meet on quarterly basis 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 and fiscal, monetary and external accounts.

Finance Minister stated that due to better policies of the government, 4.14 percent GDP growth has been achieved which is the highest level during last 6 years. We have targeted our growth at 5.1 percent for FY15. All inflation indicators are on downward trajectory. The headline inflation CPI for October is the lowest during the last 17 months and is measured at 5.8 percent. There is uptick in LSM growth during the month of August and it was reported at 5.3 per cent as compared to 4.6 percent last year. The workers’ remittances are also showing remarkable results.

FBR tax collections are on track as tax revenue increased by 13.1per cent during the first quarter. Stock exchange is performing excellent as KSE 100-index has reached above 31,000 points. Foreign exchange reserves have reached $13.267 billion, which certainly could have reached $15 billion by end September if Dharna/political crises had not damaged the situation. The Dharnas has not only impacted the current pace of economic development but badly damaged the image of the country. Due to this situation foreign investors have adopted wait and see policy and closely monitoring the current situation.

It was also noted that BoI has been activated to increase investment in the country especially FDI on fast track. Recently Board of Investment has organized International Investment Conference on this score. Recently, IMF and Pakistan successfully held productive discussion with government and SBP on Pakistan’s economic performance under EFF program and IMF is encouraged by the overall progress in strengthening macroeconomic stability and output growth.

The minister underlined the importance of resolving energy issues. In this direction, he highlighted that government is implementing time-bound strategy to tackle price distortions, insufficient collections, costly and an targeted subsidies, governance, and regulatory deficiencies, and low efficiency in energy supply and distribution with the support of our international partners. To help tackle gas shortages, the government has started efforts to import LNG and expected to received the first LNG imports by early 2015 and will fully pass-through the cost of imported LNG to the end-user purchase price as it comes online and govt is also working to improve the business climate and the trade regime to increase foreign and domestic private investment and boost economic growth.

Finance Secretary informed the meeting that the government is following prudent fiscal policy, as a recent, fiscal deficit has been brought down to 5.5 percent. The next year target is to contain it further to 4.9 percent. The first quarter of current FY15 it recorded at 1.2 percent. The economy has developed strong base and agriculture, industry and services sector’s performance is satisfactory.

Dr Ishrat Hussain appreciated the efforts of the government which improved the economic situation and eliminated the crises like situation especially on external sector of the economy.

He also stressed on the need to implement structural reforms in the country with clear signal for the facilitation of private sector, which will ensure consistency and sustainability of the economy. He particularly focused on reforms in tariffs, cost of doing business, and also in other fiscal areas. The Chair appreciated the views of Dr Ishrat Hussain and ensured commitment in all these reforms.

Minister for Planning, Development and Reforms informed that government policies have brought stability in the system and now focus is on increasing savings and investment. A number of measures are under consideration to improve saving and investment in the country, which are most essential to gain sustained economic growth.

Minister for Commerce briefed on exports and imports and also explained the facilitations which are needed to address the structural bottlenecks like electricity, gas, water etc. for increasing the exports. He underlined the importance of the GSP Plus status and its impact on exports of the country. The chair advised the Ministry of Commerce to analyze the whole situation and provide recommendations to improve the exports on fast track. It was agreed that government will take all corrective measures to diversify exports markets and commodities.

Governor State Bank informed that SBP kept the policy rate at 10 percent. All monetary aggregates are moving in comfortable zone and in smooth way. The credit to private sector is increasing and borrowing of government from SBP has declined. He briefed the impact of monetary policy on growth, investment and balance of payments.

The Finance Minister expressed the hope that the deliberations of the Board will lead to better economic coordination and the goals of the government will be achieved in a coordinated manner.