ISLAMABAD: Federal Minister for Finance, Revenue, Economic Affairs and Privatization Dr Shamshad Akhtar said on Friday (15th of September, 2023) that the country’s economy was showing signs of recovery, owing to efforts made by the caretaker government.
“The macroeconomic indicators, if you view them, you can find some betterment. There are some signs of economic recovery. Even if it is just starting,”
The minister was flanked by Caretaker Minister for Information and Broadcasting Murtaza Solangi and Caretaker Minister for Energy, Power and Petroleum Muhammad Ali.
Deliberating upon the indicators showing positive development, the finance minister said the Consumer Price Index (CPI) has shortly declined from over 38 percent in May to 27.2 percent now, adding this was an important indicator to show betterment.
The minister said the caretaker setup had inherited several challenges, however it was not frightened by them and trying to deal with them one by one, adding the government’s strategy was to prudently manage the challenges, make efforts to control expenditure and enhance revenues, which would help improve the situation
She said the country had come out of some difficulties and the situation would improve further when ‘we go forward.’
Shamshad Akhtar said the productive sectors witnessed betterment, including agriculture, which was expected to yield good output in both minor and major crops that would have a positive impact on the economic growth prospects of the country.
She said the industrial sector was also showing improvement, citing growth in cement industry adding as soon as the activity picked up gradually, the industry would also grow.
Talking about the services sector, the minister said it was very vibrant sector and had been linked with every sector.
In addition, she said the State Bank of Pakistan (SBP) had kept interest rate stagnant that would also help improve the situation by reducing cost of borrowing by industry and help its revival.
She said the government had also have talked to donors, expressing the hope that in addition to the normal flows from them, funding in some areas would be fast-tracked.
She said the government was expecting around $ 2 billion assistance on fast-track basis. The Asian Development Bank (ADB) was expected to keep its funding under Revitalizing Informal Settlements and their Environments (RISE) on fast track, she added.
She said the government was focusing on reforms of those sectors which were beneficial for people and help build the confidence of investors to attract Foreign Direct Investment (FDI).
She said the government was working on different initiatives to improve the FDI and ensure self-sustaining growth.
For remittance, she said Rs 80 billion had been allocated for the purpose of improving remittances through formal channels, adding that Rs20 billion out of this amount, had been released to banks for this purpose.
She said the foreign exchange reserves position was also stable, adding that Exchange Companies Reform and anti-smuggling operations did stabilize the rupee.
“This stability came without any bank intervention.”
The minister said the export-import bank was also being operationalized.
She said there were many other initiatives that showed the government was making efforts to bring about positive change.
Replying to a question, the Caretaker Finance Minister said that the customs duty has decreased, but the FBR has collected more revenue than its target in the first two months of the current financial year.
She said that the problems of revenue are structural and it is necessary to increase the taxpayers and tax net, FBR is working in that regard, the goals with the IMF will be completed, and we are trying to streamline the tax system.
She said that the measures being taken for the value of the currency include strengthening the regulatory rules for exchange companies, along with the ongoing measures for smuggling and hoarding of foreign exchange because no country can allow playing with the currency.
To a question about the Special Investment Facilitation Council, she said that all the relevant partners under the Council are working with consultation and transparency, attention is being given to various sectors including agriculture and IT, and we are also trying to provide a favorable environment for business and investment in the country.
To another question, she said that under the 18th amendment, the transfer of resources has been done to the provinces, and there is no excess in the allocation of resources with the Sindh government.
Under the IMF, we have to keep government expenditure transparent and our main objective is to reduce the deficit.
She said that there are inconsistencies in the tax structure in Pakistan.
“Our tax base is very low, we cannot tax agriculture, similarly, we have difficulties in taxing the real estate and retail sector, apart from legislation to expand the tax base.”
She said FBR has to be strengthened, and documenting the economy needs time, our approach has been that we continue to tax those who already pay taxes, in this regard it is very important to digitize the system.