ISLAMABAD - The government yesterday said the tough decisions it had taken have begun to bear fruit as it successfully controlled the soaring budget and trade deficits during the first quarter of the current fiscal year.

“The difficult decisions taken by the government have started bearing positive results on economic front,” Adviser to Prime Minister on Finance and Revenue Abdul Hafeez Shaikh told a press conference on Saturday.

He hoped that Pakistan would come out of FATF grey list, as Islamabad had implemented 20 of its total 40 points. Most of the FATF conditions are in Pakistan’s favour, as the government also wants to check the money-laundering, he added.

The adviser was flanked by Federal Board of Revenue (FBR) Chairman Shabbar Zaidi and Finance Secretary Naveed Kamran Baloch on the occasion.

Shaikh said that trade deficit has narrowed by over 34 percent to $5.7 billion in first quarter (July to September) of the current fiscal year from $9 billion in same period of last year.

He informed that government has also controlled the budget deficit of the country at Rs476 billion in the first quarter of Year 2019-2020, which was Rs738 billion in corresponding period of previous financial year.

Tax collection has also recorded by 16 percent in the first quarter, the adviser said. Similarly, the government has neither borrowed from the State Bank of Pakistan (SBP) not approved any supplementary grant, he said, adding that no borrowing from SBP would help in reducing the inflation rate.

He also informed the media that non-tax collection has recorded massive growth as it collected Rs406 billion. He said that exchange rate and foreign exchange reserves remained stable during July to September period of the current fiscal year.

Shaikh said that the confidence of foreign investors in Pakistan's economy was also increasing. There has been an additional $340 million net portfolio investment, he revealed.

“Exports, which remained stagnant in last five years, have started to increase. The increase in production of exports commodities would help in jobs creation,” he said. The results of the assistance provided by the government to the export sector were starting to become visible, particularly in the production of the export sector, he added.

Stock market has also shown growth in the first quarter as it has gone to 34,000 point from 28,000 point in August, the adviser said.

To a question, he said government has released more funds for the Public Sector Development Programme (PSDP) during first quarter of the ongoing fiscal year as compared to the same period of the last year.

The top economy official said that 224,000 Pakistani went abroad last year for employment whilst this year this number has surged to 373,000.

About the SMEs (Small and Medium Enterprises) he said the government will unveil a comprehensive policy regarding it within two weeks which will contain proposals of financing SMEs, incentives, ease of doing business and speedy approvals.

Shaikh informed that non-tax collection would increase by Rs400 billion to Rs1.6 trillion in the current fiscal year from budgeted Rs1.2 trillion. Giving breakup, he informed that government had already collected Rs406 billion in first quarter, while an additional Rs338 billion would be collected from telecom sector, Rs200 billion from profit of SBP, Rs300 billion from the privatization of two LNG based power plants, Rs120 billion from dividends and interest and Rs250 billion from petroleum development levy. To a question, the adviser said public welfare is the cornerstone of every economic policy of the PTI government. He said the government has not increased petroleum products for three months as the rupee has stabilized.

He said that international financial institutions including the IMF and the World Bank were also giving positive statements about Pakistan's economy. Similarly, local investors like All Pakistan Textile Mills Association (APTMA) are also acknowledging that government was helping the local industries and investors.

 

Speaking on the occasion, FBR Chairman Shabbar Zaidi said that Pakistan has discussed with UAE authorities the issue of Iqama abuse by Pakistanis. He said the UAE government has agreed to provide details of Pakistanis' properties there.

He said that dialogue with traders' community was progressing positively and there was no deadlock in it. “We have held 20-40 meetings with two groups of traders so far. The discussions were held in a positive way. There is only one issue regarding the way to determine fixed turnover tax for the small and medium traders”.

Zaidi clarified that government would not withdraw the condition of providing CNIC copy for sales and purchase of goods by traders.

 

Economic turnaround has begun to appear!