ISLAMABAD: Pakistan’s economy has started showing signs of improvement and is transitioning from crisis to stability due to stringent measures taken by the government in the last year, the country’s de-facto finance minister, Dr. Abdul Hafeez Shaikh, told Arab News on Sunday, ahead of an expected staff-level delegation visit by the International Monetary Fund (IMF) next week.
Islamabad signed off on a $6 billion bailout package from the IMF in May this year to resuscitate the country’s ailing economy. The Fund’s 39-month program is aimed at supporting “the authorities’ economic reform program” and to help “reduce economic vulnerabilities and generate sustainable and balanced growth.”
“The difficult economic decisions of the government over the past year have started yielding results … our economy has started moving from crisis to a stable regime,” said Shaikh whose official title is that of adviser to Prime Minister Imran Khan on Finance.
Shaikh said the government was taking all measures into account, including an increase in tax and non-tax revenues and a cut in government expenditures to “keep the primary balance at 0.6 percent as agreed upon with the IMF.”
The country’s exchange rate, foreign exchange reserves, and stock exchange market had all “shown stability” in the past two months, he said, while the government was focused on reviving the confidence of investors and businessmen in the country’s financial system.
“We are confident not only to achieve the target of 2.4 percent of the GDP set for this year but hope to move much ahead of it due to incentives offered to agriculture and industry,” he said.
The government has announced an Rs. 250 billion special packages for its agricultural sector, which should help achieve growth of three percent in the industry this year, he said, and added that agricultural growth had remained negative in the last five years.
Prime Minister Khan’s government has set an ambitious revenue target of Rs 5.5 trillion for this financial year to steer the country out of economic crisis and fund its development projects across the country.
“We are expecting to collect around one trillion rupees through the non-tax revenue this year, while there is over 15 percent increase in tax collection in the first two months of this fiscal year,” Shaikh said.
He added that his government was standing in front of all the “lobbies and mafias” to improve the country’s economy.
“Our sole purpose is to come up to the expectations of the people and provide them relief by keeping the inflation in check,” he added.
Earlier, a senior member of the government’s Economic Advisory Council, Dr. Ashfaque Hassan Khan, told Arab News that the targets set in the IMF bailout program “were grossly unrealistic” and unachievable in the present economic environment while another senior analyst, Dr. Vaqar Ahmed, said Pakistan’s primary tax collecting body, the Federal Board of Revenue (FBR) was “certainly struggling to meet the targets” set by the IMF.
“The FBR devised a new (tax and revenue) system to achieve the Rs. 5.5 trillion targets. But capacity gaps here are preventing the country from achieving the target,” Ahmed said.