The Finance Minister said: "it is an important body and we have planned to meet on quarterly basis to review the economic situation for bringing consistencies in monetary, fiscal and exchange rate policies and ensuring consistency among macroeconomic targets of growth, inflation and fiscal, monetary and external accounts." The Finance Minister stated that due to better policies of the government 4.14 percent GDP growth was achieved, which was the highest level during the last six years. "We have targeted our growth at 5.1 percent for FY15. All inflation indicators are on a downward trajectory. The headline inflation CPI for October is the lowest during the last 17 months and is measured at 5.8 percent. There is an uptick in LSM growth during the month of August; it has been reported at 5.3 percent as compared to 4.6 percent last year, whereas the workers' remittances also showing remarkable results."
Tax collections by FBR are on track as tax revenue increased by 13.1 percent during the first quarter. Stock exchange is performing excellent job as the KSE-100 Index has reached above 31,000 points. Foreign exchange reserves reached $13.267 billion. These could have certainly reached to $15 billion by end September if Dharna/political crises had not harmed the situation. Not only Dharnas have impacted the current pace of economic development, these also badly damaged the image of the country. Due to the situation foreign investors have adopted a wait and see policy; they are closely monitoring the current situation."
The Finance Minister suggested that "as we have Charter of Democracy we should have a charter of economy for continuity and consistency of economic policies." It was also noted that Board of Investment (BoI) has been activated to increase investment especially FDI on a fast track. Recently Board of Investment has organised International Investment Conference. Recently, the IMF successfully held productive discussions with government and SBP on Pakistan's economic performance under EFF programme and the Fund is encouraged by the government's role towards strengthening macroeconomic stability and output growth.
The Minister underlined the importance of resolving energy issue, which is hampering country's growth potential. In this direction, he highlighted that the government is implementing a time-bound strategy to tackle price distortions, insufficient collections, costly and targeted subsidies, governance, and regulatory deficiencies, and low efficiency in energy supply and distribution with the support of our international partners. To help tackle gas shortages, the government has started efforts to import Liquefied Natural Gas (LNG) and expected to receive the first LNG shipment by early 2015 and will fully pass-through the cost of imported LNG to the end-user purchase price as it comes online and the government is also working towards improving the business climate and the trade regime to increase foreign and domestic private investment and boost economic growth.
Finance Secretary informed the meeting that the government is pursuing a prudent fiscal policy; as a result of which, fiscal deficit has been brought down to 5.5 percent. The next year's target is to contain it further to 4.9 percent. The first quarter of current FY15 recorded it at 1.2 percent. The economy has developed a strong base and agriculture, industry and services sector's performances are satisfactory.
Dr Ishrat Hussain appreciated the efforts of the government towards improving the economic situation. He underscored the need for implementing structural reforms. He particularly focused on reforms in tariffs, cost of doing business, and also in other fiscal areas. The Chair ensured commitment towards all these reforms. The Minister for Planning, Development and Reforms said that the government policies have brought stability in the system and now focus is on increasing savings and investment. A number of measures are under consideration to improve saving and investment, which are most essential to gain a sustained economic growth.
The Minister for Commerce spoke about exports and imports; and also explained the facilitations which are needed to address the structural bottlenecks such as electricity, gas and water for increasing exports. He underlined the importance of the GSP plus status and its impact on exports of the country. The chair advised the Ministry of Commerce to analyse the entire situation and provide recommendations aimed at improving exports on a fast track. It was agreed that the government would take all corrective measures to diversify export markets and commodities.
The Governor State Bank of Pakistan said that SBP kept the policy rate at 10 percent. All monetary aggregates are moving in a comfortable zone and in a smooth way. Credit to private sector is increasing while government borrowing has declined. He spoke about the impact of monetary policy on growth, investment and balance of payments. The Finance Minister expressed the hope that the deliberations of the Board will lead to better economic co-ordination and the goals of the government will be achieved in a co-ordinated manner.-PR