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March 10, 2019

Forex reserves to cross $19bln by month-end: finance minister


March 10, 2019

KARACHI: Pakistan’s total foreign currency reserves will cross $19 billion by end of the current month as the country is about to receive $4.1 billion from friendly countries in a week or two, finance minister said on Saturday.

Finance Minister Asad Umar said friendly countries would transfer around $4.1 billion in next couple of weeks, which will help in building up foreign exchange reserves and easing fiscal burden.

“The official reserves of the State Bank of Pakistan (SBP) will cross $12 billion with addition of these amounts,” Umar added.

The country’s foreign exchange reserves stood at $14.956 billion as of March 1. The SBP’s reserves amounted to $8.116 billion, while commercial banks held $6.839 billion.

The finance minister was addressing a moot, ‘Financing to Support Make in Pakistan’. Pakistan Business Council (PBC) hosted the seminar. The minister said Abu Dhabi Fund for Development (ADFD) will transfer two billion dollars next week in the second tranche of three billion dollars loan. The country received one billion dollar from the foreign aid agency in January. Another $2.1 billion will come from China.

“Financial assistances have been provided on soft conditions,” the minister said. The assistance from ADFD carries three percent mark-up, while Chinese loan is linked to Shanghai Interbank Offered Rate.

Umar said critics don’t consider the fiscal condition the present government inherited while criticising the government.

When the previous government came into power in 2013, it had current account cover for seven months and 20 days. But, it still signed an International Monetary Fund’s loan program.

“When the present government sworn in the current account cover was just for 15 days,” the finance minister said.

Umar praised the SBP for managing the fiscal situation in such a brief period. The fiscal position of the country is improving as current account deficit is shrinking. Foreign exchange market is stabilising and all credit should be given to the SBP, he added.

Umar said the government set up the Economic Advisory Council, headed by Saleem Reza, former SBP governor, which is constantly working with the stakeholders to propose recommendations for economic revival.

The minister said the government is committed to facilitate business community and “that is a reason the proposals from PBC and stock exchange was accepted in the supplementary budget”.

The minister said business community is seeking another tax amnesty scheme from the government. Prime Minister Imran Khan directed the finance ministry and the Federal Board of Revenue (FBR) to consider the proposal, he added.

The finance minister, however, said the previous amnesty schemes failed to generate revenue. “Therefore, we asked the business community to come up with effective proposals,” he added.

Umar said the government is giving priority to improve industrial financing, which is imperative to attract investment.

On reduction in funds to China-Pakistan Economic Corridor projects, the finance minister said there is no cut and the government neither intends to slash them.

The minister said information technology will bring revolution for Pakistan’s economy in the coming days. The government constituted a committee to prepare recommendations.

Umar further directed the SBP to consult with the Securities and Exchange Commission of Pakistan, FBR, Pakistan Telecommunication Authority and Pakistan Banks Association to resolve financing issues and taxation problems of IT sector. The finance minister said a working group has been set up for coordination between federal and provincial governments to improve ease of doing business.

The minister said the government is working to resolve litigation issues related to taxation matters. Around four trillion rupees are stuck in litigation. The government requested the Supreme Court and higher courts to dispose the cases on priority basis.

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