DUBAI, Aug 4 (APP):Minister for Finance Senator Muhammad Ishaq Dar said on Thursday that successful completion of the last review was an indicative of government’s strong commitment in implementing difficult structural reforms in the areas of taxation,energy, monetary/financial sectors and public sector enterprises.
Finance Minister Senator Muhammad Ishaq Dar stated this while addressing a Joint press conference along with Harald Finger, IMF Mission Chief here.
Dar said that Pakistan and the IMF had successfully completed negotiations on the Final Review under the 3-year Extended Fund Facility (EFF) programme for an amount of $6.4 billion.
Highlighting the overall programme performance of Pakistan, the Finance Minister said “Our performance throughout the programme culminating in the Twelfth Review has been highly satisfactory”.
“We met the end-June 2016 Quantitative Performance Criteria on Net International Reserves, Foreign currency swap/forward position, and government borrowing from SBP by significant margins. The targets on Net Domestic Assets and budget deficit were missed marginally”, he remarked.
Finance Minister Ishaq Dar said that the indicative target for end-June, 2016 on targeted cash transfers through Benazir Income Support Programme (BISP) and on power sector arrears were met.
He informed that Federal Board of Revenue (FBR) not only achieved its annual target of Rs.3104 billion but exceeded it.
Ishaq Dar said : “This indeed is a remarkable achievement
as no downward revision was made in FBR revenue targets and the
originally fixed target was achieved and exceeded which is an
unprecedented accomplishment and speaks of the success of the
economic policies, being followed by the present government.”
The performance of FBR, he said, becomes even more
creditable when viewed in the context of the shortfall of
Rs.40 billion, recorded in the first quarter.
In the subsequent quarters, the indicative targets
were met wiping out the deficit of the first quarter, he
He said against an end-year target of Rs. 3104 billion,
FBR collected Rs. 3115 billion, according to provisional figures,
which shows a growth in excess of 20 percent, over Rs.2589
billion collected in FY2015.
In the process, he said the figure of FBR’s tax-to-GDP
ratio registered a substantial increase of one percent.
“We achieved real GDP growth rate of 4.71 percent in
FY 2016, which is the highest in the last 8 years. Since FY
2014, we have maintained GDP growth rate of above 4 percent.
For the next fiscal year, GDP growth is targeted at 5.7 percent
which will gradually steer to 7 percent in Financial Year (FY) 2017”,
He further said the industrial sector recorded a growth
of 6.8 percent during FY 2016 which is the highest in the last
Large Scale Manufacturing (LSM) growth remained robust
at 4.61 percent during FY 2016 compared to 3.29 percent last
fiscal year, he added.
Automobiles, he said registered growth at 23.4 percent
followed by Fertilizers 16 percent, Rubber products 11.6 percent,
Leather products 12.2 percent, and Chemicals 10 percent, Cement
10.4 percent and its dispatches witnessed uptick by over 17
percent; and there has been a continued credit expansion. A
welcome development is the increase in fixed investment, he
He further said that electricity and gas supplies continued to improve since the start of the current fiscal year.
The China Pakistan Economic Corridor (CPEC) would also play a significant role in further boosting economic activities, he added.
The Pakistan Stock Exchange (PSX), he said has scaled
new height of 39,800 Index on August 1, 2016 crossing the
highest Index achieved previously in August, 2015, indicating
robust economic activity and reflecting investor confidence.
Inflation, he said remained contained to less than 3 percent at 2.89 percent during the period FY 2016 as compared to 8.62 percent in FY 2014 and 4.53 percent in FY 2015.
Finance Minister Ishaq Dar said the external sector was
stable on the back of continued flows from International Financial Institutions (IFIs), low oil prices, rising remittances, albeit at a slower pace, which helped narrow down the current account deficit and maintained stability in foreign exchange market.
The foreign exchange reserves, he said increased to $23
billion as of July,22, 2016 of which SBP reserves stood at
$18.037 billion and that of scheduled banks at $4.960 billion.
The net International Reserves of the SBP have increased from a low of negative $2.5 billion at the start of the programme to positive $7.5 billion by end-June 2016.
Regarding Financial and Fiscal performance, he said that
performance of the banking sector remained steady with higher earnings and robust solvency.
The sector has high Return on Assets (RoA) of 2.2 percent
and strong Capital Adequacy Ratio (CAR) of 16.1 percent, well above the 10.25 percent minimum regulatory requirement, he said.
“We are continuing with the financial sector reforms
agenda for strengthening the legal, regulatory and supervisory framework, aimed at safeguarding stability of the financial sector”, he added.
The budget deficit, he said which stood at over 8 percent
of GDP in FY 2013 was brought down to 5.3 percent in FY 2015 and to 4.6 percent in FY 2016.
“We are also committed to reduce public debt, and
lay the foundations for a more sustained growth”, he said.
Ishaq Dar said despite the fact that the government was reducing its fiscal deficit, allocation for Public Sector
Development Programme (PSDP) has more than doubled and social safety net expenditures have increased by over 300 percent through the four budgets of the current government.
He added that the ratio of FBR’s tax to GDP has improved
significantly over the last three years, from 8.45 percent in
FY 2013 to 10.5 percent in FY 2016, which is beyond the projected increase of 10.2 percent for the period.
Regarding Social Protection, he said that Government was
committed to supporting the poor and the most vulnerable segments of population through BISP.
“With significant expansion in allocation of BISP cash transfers, which have been enhanced from Rs.40 billion in FY 2013 to Rs.115 billion in FY 2017 increasing the coverage from 3.7 million to 5.46 million families; and income support annual stipend from Rs.12000 to Rs.18800 during this period”, he remarked.
The Government, he said has disbursed more than Rs.250 billion to these poorest families during the same period.
Ishaq Dar said that in partnership with provincial governments, significant progress has been made in rollout of the education-Conditional Cash Transfers (CCTs) to the targeted needy students. In comparison to 56,000 students in 2013 currently, more than 1.3 million children are beneficiaries of the CCT in 32 districts across the country.
We will further expand the total number of children benefitting from the program to 1.6 million by June, 2017.
“Besides improving the payment mechanisms by introducing the bio-metric based payments, Government has also initiated the National Socio Economic Registry (NSER) update for a more objective and scientific targeting of deserving families”, he remarked.
Regarding Debt Management, Ishaq dar said ” We continue to diversify financing from both domestic and external sources, lengthen the maturity profile of domestic debt and improve the balance between domestic and external debt”.
To achieve these objectives, he said “we are working to further strengthen the Debt Policy Coordination Office (DPCO). We have appointed the Risk Management staff; and the Medium Term Debt Management Strategy (MTDS) has already been published. Rate setting between retail and wholesale markets have also been synchronized”.
Regarding the Energy Sector reforms, he said that the reforms were on priority agenda of the Government and are regularly monitored by the Prime Minister through the Cabinet Committee on Energy.
To implement the reforms, he said that government was working to reduce energy shortages with special emphasis to ensure sustained supply to industry with the goal of adding over 10,000 MW of electricity to the system by March 2018 along with measures to make the sector self-sustainable in line with the demands of a modern power sector.
He said “we have added imported Liquefied Natural Gas (LNG) to the system, which has improved energy supply in the country, especially to the industrial sector, as the import of LNG has doubled to 400 mmcfd”.
About Business Climate Reforms, he said that for improving business climate, we have finalized and put into implementation a new countrywide ease of doing business reform strategy with time bound measures to strengthen business climate and foster private investments.
“We have developed a comprehensive National Financial Inclusion Strategy (NFIS) to implement financial reforms to meet financing needs of the marginalized and unbanked segments of society. The strategy lays particular emphasis on including the female gender into financial inclusion”,he remarked.
Under SBP guidelines, he said for opening ‘Asaan’ Simple and Small Accounts, banks and Microfinance banks have opened more than one million accounts. In addition, over 15 million m-wallets (digital accounts) have been opened in the country.
Regarding Public Sector Entities (PSEs), Ishaq Dar said “We are continuously working to reform PSEs focusing on improving performance, reducing losses and improvement in service delivery”.
Finance Minister Ishaq Dar on the occasion reiterated that Pakistan was committed to successfully implement the macroeconomic stability programme announced by the Government in June 2013; and positive achievement in meeting the performance criteria under the Programme reflected the seriousness with which the Program is being concluded.
It is not only the quantitative targets but also the rich agenda of structural reforms being undertaken with the aim of stabilization of economy and creation of room for faster and inclusive growth, and poverty reduction.
“We have successfully completed the negotiations of the last Review. This has been a good team effort from both sides. As we move forward, our effort would be to consolidate the economic gains achieved so far towards macroeconomic stability and work towards higher growth and jobs creation”,he remarked.
Ishaq Dar on the occasion complimented Harald Finger, the IMF Mission Chief and his team for an outstanding job they have done in conducting the last Quarterly Review.