ISLAMABAD, Oct 30: The Senate standing committee on finance observed here on Thursday that the Rs50 billion bailout package for the stock market announced recently should not benefit only a few big brokers.
The committee, headed by Senator Ahmad Ali, asked the finance ministry that the proposed support programme be carried out in a manner that protects the system and was not meant to bail out influential players.
Advisor to Prime Minister on Finance and Revenue Shaukat Tareen, among others, attend the meeting. Mr Tareen gave a detailed briefing on the over-all economic positions of the country’s economic indicators.
It was recommended that the government should ensure strict adherence to the announced policy of bottom up support.
The government has announced Rs30 billion “Put Option”, a sort of sovereign guaranty, for non-resident Pakistanis to retain their shares for one more year.
“The pricing of the put option must be worked out judicially and carefully as it was very essential for success of the whole scheme,” the committee observed.
The real problem faced by the country relates to the crisis in the economy, which was affecting the stock market as well. As such immediate effective policy was required to boost economy, particularly the production sector.
“Stock market can be stabilised only through better management of economy,” the committee observed.
The committee strongly emphasised the need to revisit the tight monetary policy. It also recommended lowering of interest rate and banking spread. These steps would not only enhance the production process but industry would also revive much rapidly. Mr Tareen informed the committee about the capital flight from the country but did not come up with any workable solution to control it.
On this, the committee expressed strong apprehensions about free float of the foreign exchange.
On the statement of the advisor on finance that Pakistan has no other option but to go for an IMF programme to bailout the ailing economy of the country, the committee recommended various policy measures to avoid recourse to the IMF programme.
The committee observed that there were alternatives to get the country out of the current crisis. These include—cutting in expenditures, control capital flights, ask influential Pakistanis to bring back their amounts from foreign accounts.
The government can also make appeal to the expatriates Pakistanis to send their money back to Pakistan, launch profitable projects for attracting investment, recommended by the committee.
The committee also recommend flexible exchange rate, reducing banking spread and initiation of viable projects.
