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February 13, 2020

NA session: Hafeez Shaikh defends PTI govt’s finance policies


February 13, 2020

ISLAMABAD: Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance while defending policies of the PTI government in the National Assembly said those who opted for the International Monetary Fund (IMF) programme during the last two tenures should not criticise the incumbent government for seeking the IMF package.

“The economic situation when the country was heading towards default, forced the new government to seek the IMF programme,” the Adviser on Finance said. He said it did not suit to governments which took over in 2008 and 2013 benefited from the IMF programme, to criticise the present regime.

Shaikh said the government had to take tough budgetary measures, including cutting its expenditures and freezing the defence budget. “General Bajwa and the armed forces also supported the government on the issue of freezing the defence budget,” he said questioning did any government took such a difficult decision in the past. He said he had been part of many governments but none of them took such decisions.

He pointed out that budget of the civilian government was also reduced by Rs40 billion while imposing cut on expenses like budget for the President House and the Prime Minister while salaries of federal secretaries and Generals were also frozen.

The Adviser on Finance said that it pains him a lot when somebody says that the IMF people on part of the Pakistan government negotiated with the IMF for the loan. “We should be proud of talented man like Reza Baqir, who resigned from a high post in IMF and opted to serve the country,” he said, adding those could not even enter corridors of IMF use to criticise the IMF.

Abdul Hafeez Shaikh said the present government got IMF programme of 6 billion dollars loan on soft conditions and same also sent a message to the world that Pakistan was ready for a financial discipline. “Confidence of the world stands restored on Pakistan. World institutions, including the IMF, Bloomberg, World Bank, Asian Development Bank and Moody’s are recognising government's economic performance,” the Adviser on Finance said.

He said some friendly countries also came forward and Pakistan managed eight billion dollars as bilateral assistance and deferred oil payments.

The Adviser said the country was under burden of Rs 30,000 billion loans when the incumbent government took over in mid of July, 2018 and it had to repay Rs 5,000 loans in the next two years.

About other indicators of bad economy, he said the current account deficit had reached record peak of 20 billion dollars which reflected vulnerability to threats adding the foreign exchange reserves had also come down from 18 billion dollars to nine billion dollars from the year 2016 to 2018 while fixing dollar rate.

He recalled that the fiscal deficit when this government took over had reached the figure of Rs2300 billion while the foreign loans stood at 95 billion dollars.

He also pointed out that the growth rate of exports remained zero during five years of the last government while keeping dollar rate low and as a result imports flooded country’s market badly affecting Pakistan’s industrialization. He said the taxes also witnessed a growth of 16.5 percent during the first seven months of current fiscal year.

Hafeez Sheikh said the current account deficit has been reduced from twenty billion dollars to two billion dollars whilst the fiscal deficit has also been cut.

The Adviser said the government is not only focusing to enhance tax collection but also non tax revenue.

Abdul Hafeez Sheikh said the foreign direct investment has doubled whilst the portfolio investment has fetched three billion dollars in the first seven months of current fiscal year. He said tourism has also doubled during this period.

The Adviser on Finance said despite constraints, a serious effort is being made to bring down the prices of essential commodities observing that stoppage of trade with India also resulted in increase in prices of some perishable items. He expressed the confidence that the inflation will come down in next one to two months.

A big relief package has been announced through the Utility Stores Corporation to provide essential items such as flour, rice, pulses and sugar to the people at discounted rates. He said the government was also planning to enhance the network of utility stores from 4000 to 6000 in the next few months while number of population benefitting from stores would also increase from five million to 10 million.

The Adviser said that a ration scheme would also be launched before Ramazan under which the deserving people will be provided with essential items at twenty five percent reduced rates through the utility stores.

Hafeez Sheikh said the government has increased the funding for social safety nets from Rs100 to 192 billion rupees, which is an unprecedented increase. He said steps such as tightening monetary policy and non-borrowing from State Bank of Pakistan have been taken to keep the prices under check.

Hafeez Sheikh said seventy two percent consumers are getting subsidized power including the exporters and those consuming less than three hundred units. He said we are also trying to check power pilferage to reduce the prices of power. He said the circular debt was increasing Rs38 billion on monthly basis and the government brought that down to Rs12 billion.

The Adviser also rejected the impression that auto sale is on the decline, saying the two companies have registered increase in the sale of their vehicles while production of tractors had also increased.