Economy strong, no threat of default: Dar

ISLAMABAD: Defending the economic performance of the PML-N government, Finance Minister Ishaq Dar said the economy was strong and there was no threat of default. Dar said his ministerial position showed trust reposed by his party, the prime minister and the people of Pakistan, advising journalists to ‘just wait’ on the demand of his resignation.

The minister said there were challenges on the external account but those were manageable. There was no need to go back to the IMF programme for another bailout package, he said, adding, “We will stand up on our feet”.

In the aftermath of the Panama Papers verdict and initiation of trial against him in the NAB court, Dar broke his silence but consciously refrained from replying to the questions regarding the DG ISPR’s statements on economy and said there was no need of repeated replies as Ahsan Iqbal had already spoken on the issue.

“All institutions belong to Pakistan and efforts should not be made to further deepen controversies,” Dar replied when journalists repeatedly sought his comments on the statements of the military regarding challenges faced by the economy at the FBR headquarters on Monday evening.

The minister conceded that there were certain areas on which further improvement was required as tax-to-GDP ratio increased from 9.8 per cent to over 12.5 per cent but there was still room for improvement. There was no proposal under consideration for devaluation, he added.

To a query regarding alleged tampering with the returns of former PM Nawaz Sharif in the FBR on his directives, Dar replied that the filing of return was the responsibility of very individuals and he had never interfered in the administrative affairs of FBR.

Regarding the exact amount of foreign loans, the minister said they had also returned $16 billion and increased foreign reserves from $6 billion to around $14 billion in the last four years. He said the Coalition Support Fund (CSF) dried down as Pakistan received $550 million last fiscal year,which were used to be in the range of $1.2 billion to $2 billion in the past.

He made it clear that it was the money reimbursed, not financial aid, by the US which Pakistan had already spent. Pakistan carried out operation against militants in North Waziristan for which the country had to bear financial cost, he said, adding that there were no terror sanctuaries in Pakistan.

However, Dar said mixed signals were being given out about the economy as the World Bank wrongly projected the external financing requirements of $31 billion, which would be actually standing at $18 billion for the current fiscal year. “We took up this issue with the World Bank high-ups in Washington and they acknowledged about the wrong projection, which would be rectified in days ahead,” he added.

On the public debt, the minister said the debt-to-GDP ratio stood at 61.6 per cent from 60.2 per cent during the last four years. With a change in the definition approved by parliament under the Fiscal Responsibility and Debt Limitation (FRDLA) amended in June 2017, the government excluded the private sector loan and liabilities after which there was difference in figures published by the State Bank of Pakistan (SBP) in accordance with FRDLA as well as old practice of SBP for compiling data of public debt.

The minister said the debt-to-GDP ratio in the US and the UK was 83 per cent and 68 per cent in India, while Pakistan’s ratio slightly increased despite spending resources on security and development in the last four years.

He said the facts would speak itself as the country’s GDP growth was hovering around 3.7 per cent four years back, but the PML-N increased it up to 5.3 per cent. The Large Scale Manufacturing (LSM) growth increased from 4.5 per cent to almost 6 per cent and the per capita income went up to $1,629, he noted.

The current account deficit, he said, had gone up and efforts were under way to control the trend.Dar said the government had given an incentive package to exporters and its positive impact had resulted in achieving exports growth of over 8 per cent in the first three months of the current fiscal year.

The FBR’s revenue increased 72 per cent in absolute figures as its collection went up from Rs1,946 billion to Rs3,362 billion by June 2017.The budget deficit was brought down from 8.8 per cent to 4.8 per cent but it went up by 1 per cent and hiked to 5.8 per cent of GDP last fiscal year because the provinces did not get the agreed revenue surplus.

The minister said the circular debt stood at Rs 503 billion in June 2013 when there was load shedding of more than 20 hours a day but the load shedding had been largely reduced and the amount was currently hovering around Rs 390 billion.