IS­LAM­ABAD

The Pak Banker - - FRONT PAGE -

Pak­istan and In­ter­na­tional Mon­e­tary Fund (IMF) have suc­cess­fully com­pleted ne­go­ti­a­tions on the Eighth Re­view un­der the 3-year Ex­tended Fund Fa­cil­ity (EFF) pro­gram worth $6.2 bil­lion that would lead to re­lease of 9th tranche of over US$ 500 mil­lion.

Ad­dress­ing a press con­fer­ence at Dubai on Fri­day, Min­is­ter for Fi­nance, Ishaq Dar said that com­ple­tion of the 8th re­view is in­dica­tive of gov­ern­ment's com­mit­ment in im­ple­ment­ing struc­tural re­forms in ar­eas of tax­a­tion, energy, mon­e­tary and fi­nan­cial sec­tors and public sec­tor en­ter­prises.

Ac­cord­ing to a press re­lease of the Fi­nance Min­istry, the min­is­ter gave an over­view of na­tional econ­omy and said due to de­clin­ing oil prices in in­ter­na­tional oil mar­kets and de­crease of com­modi­ties prices in mar­ket, the cur­rent ac­count po­si­tion had im­proved and re­duced bur­den of $2.6 bil­lion that also put a pos­i­tive im­pact in over­all econ­omy. The Min­is­ter said that forex re­serves in the coun­try were also recorded at high­est level of eco­nomic history of the coun­try and it had crossed $18 bil­lion mark. The in­creas­ing re­serves had en­abled coun­try for re-qual­i­fy­ing for the con­ces­sion­ary fund fa­cil­ity of $2 bil­lion from In­ter­na­tional Bank for Re­con­struc­tion and De­vel­op­ment (IBRD), he re­marked.

He in­formed that rev­enue col­lec­tion recorded 15 per­cent growth dur­ing fis­cal year 2014-15 as com­pared to same pe­riod of last year where as real GDP growth rate was recorded at 4.24 per­cent in FY 2014-15, which was the high­est in last 7 years. The min­is­ter said that IMF had pro­jected a growth rate of 4.5 per­cent in FY 2015-16. How­ever the gov­ern­ment re­tains its goal of achiev­ing growth of 5.5 per­cent this fis­cal year.

The macroe­co­nomic sit­u­a­tion con­tin­ues to im­prove and China Pak­istan Eco­nomic Cor­ri­dor pro­ject (CPEC) would fur­ther play a sig­nif­i­cant role in eco­nomic ac­tiv­ity, he re­marked. In­fla­tion, he said is con­tin­u­ing on down­ward tra­jec­tory, the head­line in­fla­tion (CPI) fell from 8.6 per­cent in FY 2013-14 to 4.5 per­cent in FY 2014-15 adding that in July 2015 CPI fell to a 12-year low of 1.8 per­cent as com­pared to 7.9 per­cent of the cor­re­spond­ing month of last year.

About bal­ance of pay­ment, the min­is­ter said that ro­bust growth in work­ers' re­mit­tances and low oil prices con­tin­ued to help con­tain the cur­rent ac­count deficit. For­eign ex­change re­serves of SBP stood at US $13.8 bil­lion and that of sched­uled banks at US $5.0 bil­lion as of July 31, 2015, he added.

Ishaq Dar said per­for­mance of the bank­ing sec­tor re­mained ro­bust on the back of 52 per­cent surge in earn­ings and strong sol­vency as re­flected in Cap­i­tal Ad­e­quacy Ra­tio (CAR) of 17.2 per­cent. "We are mov­ing ahead with the fi­nan­cial sec­tor re­forms agenda for strength­en­ing the le­gal, reg­u­la­tory and su­per­vi­sory frame­work for safe­guard­ing sta­bil­ity of the fi­nan­cial sec­tor", he added. The gov­ern­ment had re­duced the bud­get deficit of 8.2 per­cent of GDP in FY 2012-13 to 5.5 per­cent of GDP in FY 2013-14 and with fur­ther re­duc­tion "we achieved a fis­cal deficit of 5.3 per­cent of GDP in FY 2014-15", he re­marked.

Ishaq Dar said the gov­ern­ment is de­ter­mined to con­tinue on a path of fis­cal con­sol­i­da­tion to achieve bud­get deficit tar­get of 4.3 per­cent of GDP in FY 2015-16. The gov­ern­ment was also com­mit­ted to re­duce public debt, and lay the foun­da­tions for a more sus­tained growth. De­spite the fact that the gov­ern­ment is re­duc­ing its fis­cal deficit, al­lo­ca­tion for Public Sec­tor De­vel­op­ment Plan (PSDP) and so­cial safety net ex­pen­di­ture has in­creased in suc­ces­sive bud­gets, he added.

The tax-to-GDP ra­tio, he said in­creased from 9.7 per­cent of GDP in FY 2012-13 to 10.4 per­cent in FY 2013-14, and reached 11.02 per­cent in FY 2014-15 by elim­i­na­tion of SROs, broad­en­ing of tax base and im­proved tax ad­min­is­tra­tion.

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