ISLAMABAD: Finance Minister Senator Ishaq Dar said the government has no plan to devalue Pakistani rupee while an agreement to obtain a loan from World Bank (WB) for the construction of Dasu Hydro Power Project would be inked on August 18.
At a press conference to unveil economic report of 2013-14 he said budget deficit has been reduced as it remained at 5.7 percent while cut in trade deficit would revive the confidence and trust of investors to invest more in Pakistan.
Inflation rate has reached at 8.6 percent and the government has borrowed Rs 1,303 billion worth loan from the State Bank of Pakistan. Trade deficit remained at $19.98 billion while Saudi assistance has helped Pakistan in paying the loan, he added.
Talking about energy projects especially Dasu Hydro Power Project, Dar said signing on an agreement for a loan worth $700 million for the construction of this project from the WB would be made on August 18. He said power projects of 6,900 megawatts (MW) would be completed in next two and a half year while the government was initiating 9,000 MW power projects.
He however refused to pay growing circular debt, which according to him at present stood at Rs 263 billion. He said Finance Ministry should not be blamed for this. He made it clear the circular debt would be cleared with Rs 500 billion, which would be recovered from the power defaulters.
Dar said all major international financial institutions were willing to work with Pakistan. Performance of private sector has improved while four thousand five hundred eighty seven companies were registered in corporate sector. He announced the government was about to launch social welfare schemes and programmes for the youth, which in result would also expand business activities.
He said agri loan limit would be increased which in result would increase the growth rate. The government will publish tax directory of the members of the parliament every year. Islamic Banking would be introduced phase wise.
Pak China Economic Corridor projects would not be possible without the foreign assistance. Dar said indicators showed growth and upward trend, which was positive for the country. He said economic growth, which had averaged around 3 percent in the five years before our government, was 4.14 percent, compared to 3.70 percent in 2012-13, while per capita income, which stood at $1,340 in 2012-13 increased to $1,386, showing a growth of 3.43 percent and industrial sector, which grew by 3.9 percent during Jul-May 2012-13 has registered a growth of 4.2 percent, aided by increased availability of electricity and better management of available gas supplies.
Similarly, inflation, which had averaged around 12 percent in the five years, has been recorded at 8.62 percent for 2013-14, despite undertaking significant fiscal adjustment in administrative prices and enhanced tax effort.
About Federal Board of Revenue (FBR), Dar said it had registered one of the poorest performances in the recent past of a meagre 3 percent growth in 2012-13, was up by 16.44 percent, rising from Rs 1,946 billion to Rs 2,266 billion during 2013-14.
This is a remarkable rebound in FBR performance, which would have been even better except for the steep appreciation of rupee that affected the customs revenues adversely. Incorporation of new companies, which was recorded at 3,953 during 2012-13 has increased to 4,587 during 2013-14, showing an increase of 16.03 percent, he said.
Fiscal deficit, which was registered at 8.2 percent during 2012-13 has been brought down to only 5.7 percent during 2013-14 while development spending showed significance of fiscal adjustment which was enhanced when viewed in the context of development spending as it was recorded at Rs 441 billion in 2012-13 against the revised target of Rs 425 billion, which rose by 22.5 percent from Rs 360 billion during 2012-13. He said credit to private sector was registered at negative Rs 19.2 billion (flows) during July 1, 2012 to June 28, 2013 increased to Rs 378.8 billion for the same period during 2013-14, reflecting increased investment activity in the private sector. Government borrowings from State Bank of Pakistan showed remarkable growth in private credit, which was made possible by a massive reduction in government borrowings from SBP. Against a level of Rs 1,446 billion during 2012-13, the borrowings were reduced to Rs 303 billion, merely 20.95 percent of last year’s level. Similarly, exports were recorded at $25.13 billion during 2013-14 compared to $24.46 billion in 2012-13, showing an increase of 2.73 percent and imports were recorded at $45.11 billion during 2013-14 compared to $44.95 billion in 2012-13, showing a negligible increase of 0.35 percent.
However remittances, which were recorded at $13.93 billion during 2012-13 rose to $15.83 billion during 2013-14, showing an increase of 13.7 percent which was remarkable and for which we commend the efforts of expatriate Pakistanis for playing such a critical role in country’s economy.
Moreover, exchange rate has depicted remarkable stability and appreciation during the tenure of the government. In the beginning, as the country entered into a fund programme, speculators caused significant volatility through speculative behaviour also aided by initial decline in reserves in the face of heavy payments due to International Monetary Fund (IMF) from the previous loan. The rupee had pushed up to Rs 110 in November 2013 against dollar but has been trading in the range of Rs 98-99 for nearly four months, he added.
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