Journey of economic revival not easy: Hafeez Shaikh

ISLAMABAD: Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh on Thursday said the journey for improvement of economy was not easy as tax receipts could not be increased.

He also said the government added 10 new state-owned entities in the privatisation list and now the total number went up to 17 where efforts would be made to undertake transactions at accelerated pace.

Also read: Collection of sales tax on services drops 9.4pc to Rs202.88bln in FY2019

Official sources said that with the inclusion of Pakistan Steel Mills (PSM), the privatisation list pursued by the government reached to 18 entities. For the PSM, the Privatisation Commission received bidding of three interested parties for selection of financial adviser. Now the active privatisationlist includes two RLNG plants, SME Bank, Convention Centre Islamabad, International Hotel Lahore, share of Mari Petroleum, PSM, Heavy Electrical Complex (HEC), OGDCL, PPL and others.

“There are challenges on economic front, but there should be some element of fairness in criticism. It will be unfair to hold this government responsible for adding Rs7.6 trillion into debt burden. One should find out where the government made extra spending, then the criticism would be fair,” Dr Abdul Hafeez Shaikh said while talking to journalists after attending first CAREC Capital Market Regulator Forum jointly organised by the SECP and ADB’s CAREC (Central Asia Regional Economic Cooperation) here on Thursday.

When asked about worsening fiscal position where the deficit escalated to 8.9 percent of GDP for last fiscal year, he said that out of total collected tax revenue of Rs3.8 trillion, debt servicing consumed Rs2.1 trillion and then after providing share to provinces, the government had to borrow to meet defence, development and running of the government expenditures. This ongoing financial year, he said, the debt servicing would consume alone Rs2.9 trillion.

When asked how the primary deficit target agreed with the IMF would be achieved and whether there was possibility to renegotiate with the Fund, the adviser said that they had just finalised the programme with the IMF and there was no quick fix. “There are challenges on economic and fiscal front including on FBR’s revenue collection side and they are trying to fix all problems,” he said, and added that humans could make efforts to fix problems.

On renegotiation with the IMF, he said that they had just finalised the IMF programme with a lot of difficulty so let’s see how it moved ahead. He said that no one could deny that there were challenges on revenue collection and boosting exports. He said the government included 10 new entities into privatisation list. To another query about issuance of international bonds, he said the government would soon launch international bonds but he was non-committal on any timeframe.

When asked about outstanding amount of $800 million against Etisalat, he said that he had done PTCL privatisation and it was best deal. If anyone wants investigation, he would be ready to respond on it, he added. When he was reminded that former PM Shahid Khaqan Abbasi made same claim in case of LNG and now he is languishing in jail, Dr Shaikh said that no one could change the fate, but he could reply on PTCL privatisation. He said that there were three parties in the run for privatisation and Estsalat had given bid of $2.6 billion which was higher than combined offer of two remaining parties. This higher bid, he said, perturbed the owners so there was choice in front of them either to go away with seizure of bidding amount of $40 million. The revised offer was made to all three parties in which $1.5 billion would be paid upfront, while the remaining amount would be paid in instalments. Every government in the past made effort to get payment of outstanding amount and he held meeting with their team two days ago.

Earlier, the capital market regulators from members of the CAREC met for the first time in Islamabad to discuss ways on how to improve capital markets by enhancing access to finance, supporting private sector development, economic activities and strengthening regional cooperation and integration.

Jointly organised by the Securities and Exchange Commission of Pakistan (SECP), the Asian Development Bank (ADB), Central Depository of Pakistan (CDC), and the National Clearing Company of Pakistan Limited (NCCPL), the CAREC First Capital Market Regulator Forum being held from 29 to 30 August 2019 attracted high-level officials, including Abdul Hafeez Shaikh, SECP Chairman Aamir Khan, ADB Vice-President Shixin Chen, and more than 150 regulators from the CAREC region.

“Capital markets can play a key role in financing economic growth through facilitating trade and investment flows,” said Hafeez Shaikh. “As economies develop and investment projects become larger and more complex, efficient resource allocation and risk-sharing are facilitated by the development of capital markets,” he said.

The CAREC Programme is a partnership of 11 countries -- Afghanistan, Azerbaijan, the People’s Republic of China, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan -- to promote economic growth and development through regional cooperation. Several international development partners, including ADB, the International Monetary Fund, the United Nations Development Program, and the World Bank support the activities of CAREC. ADB hosts the CAREC Secretariat in its headquarters in Manila.