ISLAMABAD, Jan 18 (APP): Minister for Finance and Revenue Hafeez Sheikh on Monday said the incumbent government inherited inflation and precarious economic crisis and has to take tough decisions to cope with the challenges.
Speaking in the Senate, he said soon after coming into power, the country foreign reserves had dipped to $ 9 billion from $ 18 billion adding that the gap between exports and imports had also widen to $ 32-35 billion.
The ratio of country’s exports had become almost zero, he added. The minister said the past government intentionally adopted a policy not to enhance country’s exports. However, the government’s top priority was to save the country from the impending default and took result-oriented decisions, he said.
He said no government wanted to go for IMF funding but it was imperative to approach the International Monetary Fund (IMF) due to the country’s economic situation at that time.
The minister said the government had to introduce strict financial discipline to curtail excessive government expenditure, increase revenue collection, introduce market driven exchange rate, remove large tax exemptions and discourage imports.
He said that the government did not borrow even a single penny form the State Bank of Pakistan during the last one and half year, while no supplementary grants were given.
He said the government had to take very unpopular decision of not giving any raise in salaries to the employees. He also thanked the armed forces for freezing its budget. On one side, the government’s expenditures were curtailed and on the other hand, steps were being taken to enhance the tax collection net, he added.
Hafeez Sheikh said the tax collection ratio had witnessed 17 per cent increase before the COVID-19. The country was going towards stability owing to the steps taken by the government, he said.
However, he said the COVID-19 affected the whole world including Pakistan. The minister said despite many challenges, the government gave a stimulus package to the people for providing relief to them during the COVID-19.
He said the government, not only paid electricity bills of the three months but also gave a special package to the construction industry and relief in banks loans to the companies and the people.
As many as 90 per cent tax exemption was given to the people for purchasing small houses, he added.
Regarding public debt, the minister said blaming the government for current debt spike, was unfair because it was also paying the loans obtained by the previous governments.
He said the debt was acquired for repayment of already taken loans and its interests. The rupee devaluation was also a reason for increase of public debt, he added. He said the government was focusing on reducing foreign debt as it was a big burden on country’s economy.
He said owing to the efforts of the government, the current account was now in surplus. “Due to primary surplus, we don’t need loans if we don’t have to repay previous loans,” he said.
The minister said the government was investing such programmes which help generate employment opportunities. The minister said the government not only cleared refund claims worth Rs 250 billion but also provided subsidies on electricity and gas to the consumers.
He said financial assistance to 15 million families was provided during the COVID-19 without any discrimination. Budget of Ehasas programme has already been doubled to Rs 192 billion, he added. Similarly, he said Rs 152 billion was allocated for the development of former tribal areas.
Regarding exports, the minister said the country exports witnessed sharp increase after the decades and the textile sector recorded 16 per cent growth, readymade garments and pharmaceutical each 25 per cent, cement 14 per cent and process foods 120 per cent etc.
Moreover, the large scale manufacturing industry was also on path of recovery and witnessed a growth of 7.5 per cent. The Minister said now the combined impact of various progressive economic indicators show that the country was moving forward.