ISLAMABAD: Finance Minister Shaukat Tarin said on Wednesday the International Monetary Fund’s (IMF) Executive Board had delayed on Pakistan’s request its case for completion of the sixth review because of authorities’ inability to get the State Bank of Pakistan amendment act passed by the Senate.
“The IMF board was kind enough to accept our request and postpone the review until February 2,” he said at a news conference. He said the government was required to get the SBP bill passed by the Senate on Wednesday so that the IMF board could consider completion of the sixth review at its meeting slated for Jan 28, but this could not be done.
“We are taking the bill to the Senate soon and hopefully get it passed,” he said in reply to a question.
The minister admitted that people in urban areas, the salaried class and those belonging to middle and lower-middle classes were suffering because of inflation. Therefore, he said, the government would come up with a plan within a couple of days to increase their income because it was not yet certain how long the super cycle of commodity prices in the global market would prolong.
Says government will soon come up with a plan to increase income of inflation-hit people
In reply to a question, Mr Tarin said the government would introduce innovative means to increase income of the middle and salaried classes in a manner that it did not impact the budget or the deficit target. He said he would not disclose further details of the plan as it was currently in the finalisation stage and would be made public in a week or so.
In reply to a question about the notification (IFRS-9) issued by the State Bank requiring commercial banks to consider the possibility of default on government loans while making their loan allocations, the minister said the notification was an international requirement to contain financial risks, but the government would sit with the SBP and banks to provide exemption on government loans. The risk of government debt could not be treated like those of commercial loans, he added.
The finance minister said the country faced four big crises since the current government came to power and yet the national economy was moving in the right direction as was evident from its revised 5.37 per cent growth rate during the fiscal year 2020-21, which further went up to 5.57pc under the new 2015-16 rebasing. “Nobody expected this but it happened” as all sectors posted positive growth, he added.
Mr Tarin said the growth rate during the current year was expected at 5pc as the overall revenue collection has witnessed tremendous growth, with electricity utilisation increasing by 13pc, exports rising and bumper crops being expected.
The minister said the government was faced with an external account crisis at the very outset, followed by the Covid-19 pandemic that affected the entire world. Then came the crisis of international commodity price surge, followed by the situation in Afghanistan after the US troops withdrawal and subsequent freeze on Kabul’s accounts.
Mr Tarin said Prime Minister Imran Khan’s policies vis-à-vis Covid-19 had saved the economy from disaster and helped businesses and the poor stay afloat through smart lockdowns despite strong criticism. The prime minister’s policies were not only appreciated globally but also followed by the developed countries, he added.
He said that owing to the government’s prudent policies, remittances from overseas Pakistanis had increased and exports risen by around 29pc, even though imports had surged because of 85-90pc increase in prices of oil, edible oil, pulses, steel, etc. He said that at present exports were averaging $3 billion per month compared to $2bn in the past, and hoped that the trend would ensure export of goods reached $31bn and that of IT crossed $3.5bn as targeted.
The minister said the Afghan crisis had affected Pakistan for being the next door neighbour as they found no place to meet their daily-use requirements of essential commodities and dollars. He said the government had taken steps to contain currency outflow to Afghanistan which initially amounted to $20 million a day and replaced some transactions in Pakistani currency. Going forward, he said the two countries would also bank on barter trade.
Mr Tarin said private sector credit offtake was unprecedented and stood at Rs1.15 trillion, while there was not only no borrowing from the central bank over the past three years, but also retirement of Rs1.5tr was ensured. As a result, the stock of government borrowing from the SBP declined to Rs6tr from Rs7.5tr earlier.
Moreover, he said, profitability of 100 top corporate entities had crossed Rs929bn last year when compared to Rs580bn three years ago. The revenue collection went up by 33pc.
Replying to a question about the new corruption perception ranking of Pakistan by Transparency International (TI), the minister said TI had maintained all other indicators at the previous level, except one Economic Intelligence Unit, the score of which decreased from 37 to 20 that caused a decline in Pakistan’s ranking. At the moment, TI “has issued only a brief one pager, and as soon as we get the detail, we will respond in detail”, he said.
Responding to a question about a surge in income tax paid by Prime Minister Khan from Rs9m to Rs98m in a year, the finance minister said this meant his income had increased by just Rs30m. He said the amount was not such that could have anything to do with corruption.
Published in Dawn, January 27th, 2022