KARACHI/ LAHORE: Finance Minister Dr Abdul Hafeez Shaikh has claimed that Pakistan survived the global economic meltdown in the wake of the coronavirus pandemic much better than the rest of the world.
Talking in Geo News programme 'Aaj Shazeb Khanzada Kay Sath', he said the global economy suffered 8-fold more damages than that of Pakistan. Shaikh said Pakistan’s GDP growth rate was negative 0.5percent when we were emerging from the first wave of the pandemic, compared to the global growth rate of negative four percent. The world recognises that Pakistan’s economy absorbed the global shocks and performed better, the finance minister claimed. Economies of several countries continue to remain in the woods, he said.
Pakistan’s priority was to primarily protect the people against the deadly virus and the ensuing financial crisis. The government reached out especially to the 15 million poor through cash disbursements, besides offering economic packages to different industries and sectors for their revival.
The finance minister claimed that it is for the first time that the large scale manufacturing sector has shown major growth. He said the Rs20bn deficit that the PTI government inherited has now been turned into positive. The primary balance between government’s income and expenditure is also in surplus, he said.
The economy survived the global shock and will continue to grow and expand, he said. Dr Shaikh said Prime Minister Imran Khan’s government inherited massive economic crisis.
The external trade deficit was at a historic high of USD 20bn. The loans taken by the previous governments stifled their overall growth and development. By keeping the USD rate artificially down the previous government for five years weakened the industrial base and exports practically dropped to zero.
They wrecked the forex in order to keep the USD rate down, he added. The policies and measures taken by the PTI government paid off and we can now see a robust growth in exports.
Dr Shaikh said we are focused to bring the under developed areas at par with the developed ones due to increase in the income which would also prevent some people getting richer at the expense of the rest.
The finance minister said this year the wheat production dropped far lower than the national demand due to which we had to import 40 lakh tonnes of the commodity worth over one billion USD. But the biggest cause of fiscal deficit is the large interest payments that have to make on the expensive loans taken by the previous governments.
Dr Abdul Hafeez Shaikh said the State Bank of Pakistan (SBP) decided to increase interest rate to control inflation. In case of higher interest rate, investors are encouraged to make investment in Pakistani Rupee, he added.
He said that during the previous government’s five years an illogical policy of keeping dollar cheap was adopted. Due to that policy, every other person was buying dollars, and dollar was also being sent abroad.
To a question, Hafeez Shaikh said Pakistan gad very good relations with the IMF, and talks were continuing with it on regular basis. He said talks were under way at very advanced level for review of the IMF programme.
He said the IMF was satisfied with Pakistan’s monitory policy, and the Fund was observing that the government was strictly implementing a policy of controlling its expenses. Hafeez Shaikh said that the government took no loan from the SBP during the past one-and-a-half years and no supplementary grant was issued outside the budgetary allocations. He said before the coronavirus pandemic outbreak, taxes were collected at the rate of 17 per cent.
However, business suffered a lot due to the virus; therefore, no strict measures could be taken for collection of taxes in such a situation. He said the IMF had been informed that taking strict measures for tax collection during the pandemic outbreak would add to difficulties of the industry.
The finance minister said that increasing exports and fetching maximum foreign exchange was crucial for enhancing country’s revenues in a sustainable manner. He said the previous government exhausted all forex and dollars before handing over the country to the new government; however, the PTI government would not commit the mistake of ignoring the exports of the country.
He said the industries exporting their products were being given soft loans and cheap electricity and gas. He said such industries were given refunds of $244 billion, while in the first six months of the current financial year, refunds of $217 billion had been made.
He said the government was alert to performance of services sector, increase in imports and restart of hundi/ hawala system. He said that the people of Pakistan were main focus of Prime Minister Imran Khan’s attention.
He said prosperity could not be brought about without increasing exports. He said subsidy in that regard would be given only to the deserving sectors. He said those selling their textile products locally could not be provided facilities being offered to those who export their products.
