World’s leading financial institutions have given Pakistan their vote of confidence: Hafeez Sheikh

December 03, 2019

Adviser to the Prime Minister on Finance Dr Abdul Hafeez Sheikh on Tuesday said that the world’s leading financial institutions had given Pakistan their vote of confidence and acknowledged the improvement over the past five months in its economic indicators.

“The World Bank president came and appreciated Pakistan’s performance and instructed that better ties with Pakistan be formed.

Prime Minister on Finance Dr Abdul Hafeez Sheikh addresses a press conference flanked by  Federal Minister of Economic Affairs Hammad Azhar (left) and Federal Board of Revenue (FBR) Chairman Shabbar Zaidi (right), in Islamabad on Tuesday. — PID
Prime Minister on Finance Dr Abdul Hafeez Sheikh addresses a press conference flanked by Federal Minister of Economic Affairs Hammad Azhar (left) and Federal Board of Revenue (FBR) Chairman Shabbar Zaidi (right), in Islamabad on Tuesday. — PID.

“The Asian Development Bank, the foremost entity with whom we are linked to economically right now, also recognised the improvement in the performance of Pakistan’s economy and declared a $3 billion increase in its programme,” said Sheikh as he held a press conference in Islamabad alongside Federal Minister of Economic Affairs Hammad Azhar, Federal Board of Revenue (FBR) Chairman Shabbar Zaidi, and special finance secretary Umar Hameed.

“Similarly, IMF (International Monetary Fund), viewed as the world’s largest financial lender and whose fundamental task is to form an opinion regarding the various economies across the world, after viewing our economic performance, declared that all of Pakistan’s agreements made with the iMF had been befittingly achieved,” he continued.

The finance advisor said the IMF board was subsequently recommended to “immediately disburse the next installment of the aid package to Pakistan amounting to $500 million”.

He said the most important fact, for which the press conference had been called, was to discuss Moody’s rating for Pakistan which had moved from “negative” to “stable”. “This report has shown the world that the reforms brought about by Pakistan in its economy are being appreciated by the world’s leading financial institutions.”

Discussing how Pakistan’s economy is being viewed by “those who hold authority over the world’s capital”, the finance advisor said that an unprecedented $1bn portfolio investment had been made. “So Pakistan’s exchange rate is now being viewed as stable and people foresee a good return on their investment.”

Sheikh said that Foreign Direct Investment — investment made directly in the economy — had witnessed a 236 per cent increase compared to last year. As of October, this investment was $650m, he said.

Furthermore, he said that our local investors’ confidence can be assessed from the fact that our stock market had crossed 40,000 points. The advisor also called attention to the fact that Bloomberg had announced that among the world’s stock markets, Pakistan’s stock market had performed the best in dollar terms over the past three months.

The finance advisor also said that the country had experienced a 16 per cent increase in tax revenues over the past five months and government expenditures are being tightly controlled. “No supplementary grant is being given and neither is someone being allowed any needless expenditures.” He said owing to this, Pakistan’s “primary balance is in the surplus”.

Sheikh said that the State Bank of Pakistan’s reserves had also not only remained stable, but had risen in the past few months.

Speaking of non-tax revenues, he said an increment of more than 100pc had been seen compared to last year. “Our target this year of Rs1,200bn will be met easily; in fact, we should be able to achieve excess funds to the tune of Rs200 to Rs300bn.”

Road map ahead

The finance advisor then broke down the government’s road map for the economy in the coming months. “We wish to see more employment opportunities, greater economic activity and an increase in the growth rate.”

He said the government aims to raise exports so businessmen can earn more. “For that we have provided subsidised electricity and gas rates with the government bearing the difference.”

Additionally, Sheikh said the export sectors were being offered loans at an interest rate lower that the current market rate of 13.25pc. He said that the government, for this purpose, had set aside Rs300bn for concessionary loans to exporters.

The finance advisor said the government also aims to increase construction activity and to offer subsidies to low-income families. “So the government has set aside Rs30bn as a subsidy for low-income families.”

Sheikh reminded the media that exporters are currently not taxed while exporting items. “When they pay tax, it is refunded.” He said the Federal Board of Revenue (FBR) had implemented a computerised system with which refunds of up to 100pc are made within 72 hours.

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