Adviser stresses continuation of fiscal policy reforms

ISLAMABAD: Adviser for Commerce and Investment Razak Dawood on Thursday emphasised the need to continue removing anomalies in the tariff structure to improve balance of trade.

Dawood said trade deficit registered modest improvement in the July-November period as exports increased 2 percent year-on-year and imports remained stagnant. “The fiscal policy reforms being undertaken under the national tariff policy must continue,” he said during a meeting of the monetary and fiscal policies coordination board.

“Domestic industry, especially export-oriented sector, may be provided needed support to expand their operations. Similarly, the inflationary pressures must be kept in check to ensure competitiveness.”

Minister for Finance and Revenue Hafeez Shaikh emphasised the active role of monetary and fiscal policies coordination board for designing policies to address economic challenges. He directed officials to make the platform more effective for achieving better coordination among all concerned to attain desired macroeconomic goals.

Shaikh also stressed the need for timely provision of economic data for effective policymaking. The board should be more proactive in reviewing the impact of fiscal and monetary policies on economic growth, employment, investment and external sector of the economy.

In November, government approved the country’s first-ever national tariff policy aimed at to remove anomalies in import duties structure and use it as an instrument to catalyse industrial production and for export growth. The policy envisaged simplification of tariff slabs based on the principle of cascading, gradual reduction of tariffs on raw materials, intermediate and capital goods, gradual cut in additional customs duty and regulatory duties, and elimination of the difference in tariffs for commercial importers and industrial users of raw materials, intermediate and capital goods to provide a level-playing field to the small and medium enterprises through competitive access to essential raw materials.

Planning Commission Deputy Chairman Jehanzeb Khan said the first two quarters of the FY2021 have been marked by a rebound in economic activities amid COVID-19. The economic recovery can be attributed to accommodative fiscal policy. Large scale manufacturing and housing sectors have started showing signs of growth and improvement, he said.

State Bank of Pakistan Governor Reza Baqir said monetary policy is accommodative due to COVID-19 and has paved way for economic recovery during the first quarter. There is an improvement in the country’s external accounts. The steady worker remittance inflows and improved trade balance of goods and services were the notable developments, he said.

The meeting was told that comprehensive data analysis is a key to rational decision making. The economy has witnessed a considerable recovery during first five months of FY2021 as a result of continued domestic economic activity.