Federal Minister for Finance and Revenue Miftah Ismail said Wednesday that Pakistan has successfully averted a Sri Lanka-like situation and the economy of the country is now heading in the right direction.
“There were serious worries about Pakistan heading Sri Lanka’s way and Pakistan getting into a default like situation but thankfully we made some significant changes… I think we averted that situation,” the minister said in an interview with CNBC television channel. He said that the country was now in International Monetary Fund (IMF) programme while a staff level agreement has already been signed and approval from IMF board for release of funds under the Extended Fund Facility is expected to be given by end of this month (August).
The minister said, the country was headed in a right direction adding that due to reduction in demand, the interest rates has been increased. The imports have also gone down whereas the Pakistani rupee has appreciated by around 7 percent against dollar during last week. The minister said that the tough decision and measures taken by the government had affected people of the country, however government had no other option to save economy from collapsing.
He said the international fuel prices increased while the commodity and edible oil prices also surged, creating challenging environment at international level. He said, the Pakistan economy was not in position to absorb the international price-hike shocks and that was why the government had to pass on the price increase to the people to avert Sri Lanka like situation in the country. He said, Pakistan was passing through difficult times, however expressed the hope that the prices in international market would come down within a couple of months and would help reduce domestic inflation.
The minister said that although the headline inflation was touching 25 percent however expressed the hope that it would come down as fuel and commodity prices decline, expecting that the inflation would remain around 12 percent. He said that there were imports of $80 billion last year while the export stood at $31billion and remittance $30 billion, showing that the country had deficit of around $20 billion.
To a question about rise in interest rates, the minister said that it was State Bank of Pakistan (SBP) to decide change in markup rates after taking into account several economic indicators. Talking about China Pakistan Economic Corridor (CPEC), the minister said that it was a flagship project and Pakistan welcomed other countries including Afghanistan, Iran, Central Asian countries, Saudi Arabia, United Arab Emirates and Oman to joint it.
He said, the regional countries could also benefit from it as the project could be of great benefit for people of the region. Federal Minister on Finance and Revenue, Miftah Ismail here on Wednesday expressed government’s resolve to promote the business activities and facilitate the business community to attain sustainable growth in the country. He was talking to a delegation of Pakistan Hosiery Manufacturers and Exporters Association (PHMA) headed by its chairman Mian Kashif Zia, according to press statement issued by finance division. The minister assured the delegation members of resolving their issues at priority and also stressed on PHMA to enhance exports base.
The minister directed the relevant authorities to resolve the issues of hosiery and knitwear industry, the statement added. Earlier, the delegation members highlighted the contribution of hosiery and knitwear industry in accelerating and providing growth in all sectors of the economy. They apprised the minister about issues related to taxation, refund of Sales Tax, electricity & gas tariff etc. Issues pertaining to response of commercial banks in opening of LCs, Drawback of Local Taxes and Levies (DLTL) and Pakistan Single Window (PSW) were also discussed in the meeting.
Among others, the meeting was attended by Deputy Governor State Bank of Pakistan (SBP), Member Federal Board of Revenue (FBR), senior officers from finance and commerce ministries and delegation members Mian Farrukh Iqbal, Dr. Khurram Tariq, Rana Altaf Ahmed, Hafiz Rashid Mehmood and Tahir Rehman.
