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March 7, 2020

Ministry of Finance rejects claims about high unemployment rate

National

March 7, 2020

ISLAMABAD: The Ministry of Finance has rejected claims about unemployment rate that can be as high as 8 percent this year due to the prevailing economic conditions. It is wrongly described as leading to a reported loss of almost one million jobs, 24 per cent hike in the prices of food items and further addition of 10 million people to those falling under the poverty line.

“These claims made without any corroborating evidence about the expected loss of jobs and higher unemployment rate are not based on facts since the latest labour force survey is not published yet, and a true picture would emerge only after the latest facts and figures are available after their publication by the Pakistan Bureau of Statistics (PBS),” said the Finance Division in a press statement issued to the media on Friday.

The Ministry of Finance also stressed that the economic condition was only improving with each passing day and the payoff from ongoing stabilization efforts had already become visible in the form of improvement in key economic indicators like current account deficit reduced by 72pc during July-January FY2020, workers remittances increased by 4.1pc, foreign direct investment (FDI) grew by 65.7pc, exports increased by 3.6pc (provisional) during Jul-Feb, FY2020, fiscal deficit contained at 2.3pc during Jul-Dec FY2020, and significant rise recorded in FBR tax revenues to Rs.2,731 billion (17.1pc) during Jul-Feb FY2020. “All of the above development is an affirmation of the government’s success in stabilizing the economy and laying a foundation for robust growth.”

Similarly, the claim of losing jobs and expected higher unemployment rate is also not based on facts as the latest labour force survey is not published yet. Latest facts and figures would be available after its publication by the Pakistan Bureau of Statistics (PBS). However, it is worth mentioning that job creation is one of the key objectives of economic reform agenda of the government.

To boost up the agriculture sector and to increase the employment opportunities in rural areas, the federal government is implementing the “National Agriculture Emergency Programme”. The government is providing a series of subsidies and incentives to the industrial sector to boost jobs. These include subsidies to industry for electricity and gas, export development package and continuation of provision of Long-Term Trade Financing (LTFF) and Export Refinancing Scheme (ERS) at subsidized rate. The government has allocated an amount of Rs.125.184 billion for 10 billion Tree Tsunami that will create two million jobs and Rs6 billion has been released for this project. Under the Kamyab Jawan Youth Entrepreneurship Programme (YES), Rs.128 million has been disbursed till January, 2020 to youth to set up/expand business. Hunarmand Pakistan Program of Rs10 billion has been launched to facilitate the youth through skill development and so far Rs1.5 billion has been released.

The State Bank of Pakistan (SBP) has enhanced the payment limits against freelance services in computer and information system from $5,000/individual/ month to $25,000/individual/month. This would also enable freelancers to expand their business or operations and engage new individuals to join the workforce.

PSDP has been increased from Rs.561 billion to Rs.701 billion in FY2020 that will have multiplier effect on private investment. The PSDP authorization went up to Rs464.7 billion (as on 28-02-2020) as against Rs365.23 billion last year. The process of releases under the Public Sector Development Program (PSDP) has been simplified.

With regard to inflation, the government is making all efforts to bring down inflation by ensuring smooth supply of commodities, checking hoarding, smuggling and undue profiteering. Further, vigilant monitoring of prices both at federal and provincial levels has been ensured. The recent data of inflation indicates that the CPI inflation decreased by 1.0pc on MoM in February 2020 over January 2020. However on YoY, recorded at 12.4pc in February 2020 over February 2019 and July-February CPI inflation reached to 11.7pc (6.0pc last year).

The present government has emphasized on price control through different policy, administrative and relief measures which include:

Policy Measures -- The ECC allowed import of 0.3 million tons of wheat to decrease the local wheat price and meet the domestic requirement. In order to control its prices, the ECC approved waiving 60% regulatory duty and 7% withholding taxes on its import. The ECC banned sugar export in an attempt to regulate the surging prices. The government has discontinued borrowing from the State Bank of Pakistan which has inflationary impact and switched to commercial banks for borrowing which is less inflationary in nature. The government has retired Rs757.0 bn (Jul- 21st-Feb, FY2020) as compared to borrowing of Rs1,487.5 billion the same period last year. To contain fiscal deficit, there is complete restriction on supplementary grants to ease out inflationary pressures. SBP has raised policy rate to 13.25 bps since July, 2018 to compress aggregate demand and to control inflation.

Administrative Measures -- Prices Monitoring Cell in Ministry of National Food Security is monitoring price hikes of essential food items. The government is expanding the network of Sasta Bazaars and Utility Stores outlets for provision of smooth supply of essential items. The CCP is taking effective measures to control cartelization and undue profit. The CCP has been directed to check anti-competitive practices and take prudent administrative measures for eliminating hoarding.

The positive impact of above mentioned measures of the government has been visible in form of declining trend in prices of food items such as pulses, fresh vegetables and wheat on the monthly basis.

The Sensitive Price Indicator (SPI) which monitors the price movement of 51 essential items on weekly basis recorded a decrease of 1.16pc for the week ended on 27th February, 2020. During the week, 13 items recorded decline in their prices while 25 items remained stable. This is the third consecutive decline in the SPI during the month of February 2020. To protect the poor segments of society, a subsidy of Rs226.5 billion has been allocated in the budget for customers who use less than 300 units of electricity in a month and an amount of Rs131.9 billion released during July-Feb, FY2020.

Similarly, out of Rs24 billion allocated for gas subsidy, Rs15.5 billion have been released during July-Feb FY2020. In addition, subsidy to the USC has also been given in order to ensure availability of affordable basic food items to common man.

Similarly, the claim with regard to poverty is not in line with the ongoing government’s programs/agenda to lessen the burden of policy adjustments/reforms on common man and to uplift various sectors of the economy with an aim to achieve higher sustainable and inclusive economic growth.

Most importantly, the government has made various targeted poverty reduction interventions through Ehsaas Program, BISP, Sehat Sahulat program, expanding coverage of Waseela-e-Taleem program, Tree Tsunami program, Clean & Green Pakistan, etc. Under Ehsaas, various programs have been launched.

• National Poverty Graduation Initiative: 490,122 borrowers have been provided interest-free loans amounting to Rs18.5 billion during Jul-Jan.

• Launched 200,000 Ehsaas undergraduate scholarships programme of Rs20 billion under HEC

• BISP is providing unconditional cash transfer Rs5,500 per quarter to 5.02 million beneficiaries, with an annual budget of Rs180 billion.

• Tahafuz pilot project of Rs55 million has been launched to provide financial assistance, legal aid and upscaling of successful NGOs programmes. An amount of Rs16 million has been released.

• Ehsaas Amdan (Income) Programme Ehsaas Amdan (Income) Programme will provide assets to enable the underprivileged to start small businesses along with skills training and business planning. The total budget of the programme is approximately PKR 15 billion.

We are of the view that various policies and reforms would prove conducive to our economy and bring about improvements in our economic development along with providing relief to common man