Pakistan and the International Monetary Fund (IMF) Wednesday, successfully completed Article IV consultations. These discussions are annual feature and are conducted under Articles of Agreement of the Fund.
Successful completion of these discussions is indicative of government’s continued commitment at further deepening of structural reforms in the areas of energy, monetary, financial and public sector enterprises.
The two sides successfully completed the Extended Fund Facility (EFF) Programme with the IMF in August 2016.
Finance Minister Ishaq Dar while addressing a joint press conference along with IMF Mission Chief Harald Finger in Dubai said that the consultations under Article IV broadly covered multiple areas of the economy. “The GDP continued to maintain its growth momentum above 4 percent for the third year in a row. In the current fiscal year, we are expecting a growth above 5 percent, which will be the highest in the last nine years.”
Dar said, overall economic environment is conducive backed by an accommodative monetary policy as policy rate at 5.75 percent is the lowest in last few decades. Inflation during March, 2017 slightly increased to 4.9 percent compared to 3.9 percent y-o-y. During July-March FY 2017 it stood at 4.01 percent compared to last year’s 2.64 percent reflecting higher domestic demand and increase in global commodity prices.
Uptick in credit expansion to private sector has increased to Rs. 393 billion during July-March 2017. There has been a surge in import of machinery of over 42 percent and raw materials pointing to robust industrial activities and build up of future productive capacity of the economy.
LSM continues to grow at 3.5 percent with increase in production of cement, steel, pharmaceuticals, automobiles, paper & board and electronics with appropriate interventions for Agri sector in Finance Bill 2016-17, Growth in Agriculture is also expected to rebound on account of better production of cotton, sugar, maize and increased prospects for wheat production. Increase in production of commodities will have a spillover effect on services sector.
He said, the budget deficit, which stood at 8.2 percent of GDP in FY 2013, has been brought down to 4.6 percent in FY 2016. During current FY 2017 it is now projected to be 4.1% of GDP. “We are also committed to reduce net public debt which was 60.2% at close of FY 2016 in order to lay the foundations for sustained growth”.
In March, 2017, FBR recorded a growth of 16.1 % in revenue collection as it collected Rs 345 billion against a collection of Rs 297 billion in the corresponding month of the last year. Thus, total collection by FBR in first nine months of the current financial year is Rs 2258 billion which is unprecedented in FBR history.
Pakistan took two important initiatives. First, on 21st March 2107, when it signed the revised Avoidance of Double Taxation Agreement with Switzerland. Second, Pakistan signed on 14th Sept2016 the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters. These initiatives would help reduce and prevent tax evasion in future.
The finance minister said, despite reducing fiscal deficit over the last three years, allocation for Public Sector Development Program (PSDP) has more than doubled and during FY 2017, the budget deficit (borrowing) will be only for its development spending, which is a milestone achievement.
Dar said, at present, our foreign exchange reserves are hovering around $ 22 billion, which are expected to reach over $ 23 billion by end June 2017. He said the Government is committed to supporting the poor and the most vulnerable segments of population through BISP. Social safety net expenditures have increased by over 300 percent through the four budgets of the current government.
He said, deepening of the energy sector reforms continues to be a priority agenda of the Government the government is committed to continuing its work to make Pakistan financially and digitally inclusive country. “Our Government is committed to successfully implementing the macroeconomic stability program announced by PML(N) under the leadership of Muhammad Nawaz Sharif in its manifesto before 2013 general elections.
Dar said, positive macroeconomic achievements to date and continuous implementation and deepening of structural reforms reflect the seriousness of the efforts of this Government for creation of room for higher, inclusive and sustainable growth, jobs creation and poverty reduction.