- Finance minister dismisses ‘minus Nawaz’ formula, claims all round improvement in economic sector during first year of Nawaz govt with an economic growth rate of 4.14 per cent
Finance Minister Ishaq Dar has dismissed the “minus Nawaz” formula which calls for the resignation of Pakistan’s prime minister, saying that during the first year, the government has been able to put the economy on the right track and there has been an improvement in economic sector.
“The resignation of the prime minister is out of the question,” Dar said during a news conference.
The finance minister stressed that the Pakistan Muslim League – Nawaz (PML-N) was keen on electoral reforms and those seeking this should stay within the limits of the Constitution.
Giving details of improvement in the economy in the last one year, Dar said that the 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. This is the highest growth in the last six years.
He said per capita income, which stood at $ 1,340 in 2012-13 increased to $ 1,386, showing a growth of 3.43 percent; industrial sector, which grew by 3.9 percent during Jul-May2012-13, has registered a growth of 4.2 percent, aided by increased availability of electricity and better management of available gas supplies. This is also highest in the last six years.
He said Inflation, which had averaged around 12 percent in the five years before our government, has been recorded at 8.62 percent for 2013-14, despite undertaking significant fiscal adjustment in administrative prices and enhanced tax effort
FBR revenues, which had registered one of the poorest performances in the recent past of a meagre 3 percent growth in 2012-13, are up by 16.44 percent, rising from Rs 1946 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.
The finance minister 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. This is the single largest fiscal adjustment in one year. He said the significance of fiscal adjustment is enhanced when viewed in the context of development spending, which was recorded at Rs 441 in 2012-13 billion against the revised target of Rs 425 billion. Thus, unlike in the past when adjustment was achieved by cutting the development spending, the PML-N government has made full development spending, which rose by 22.5 percent from Rs 360 billion during 2012-13.
Credit to Private Sector, which 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; This remarkable growth in private credit 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.
Exports were recorded at $ 25.13 billion during 2013-14 compared to $ 24.46 billion in 2012-13, showing an increase of 2.73 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.
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 is remarkable and for which he commend the efforts of expatriate Pakistanis for playing such a critical role in country’s economy.
Dar said Exchange Rate has depicted remarkable stability and appreciation during the tenure of the government. In the beginning, as the country entered into a Fund program, speculators caused significant volatility through speculative behaviour, also aided by initial decline in reserves in the face of heavy payments due to IMF from the previous loan.
The government has handled the crisis deftly as, on the one hand, it checked the speculative behaviour and, on the other, mobilized additional resources to shore-up reserves. The rupee had pushed-up to Rs 110 in November 2013 but has been trading in the range of Rs 98-99 for nearly four months. This is the single most important indicator of economic stability as it affects a large number of other variables like prices and cost of production. A stable exchange rate is the lynchpin of a stable economy.
The Finance Minister said Official Foreign Exchange Reserves had declined to a precarious level when in June 2013 they stood at $6 billion, of which $2 billion were due to a swap that was payable in August. More importantly, besides regular debt servicing, a payment of $3.2 billion was due to IMF, bulk of which in the first half of the fiscal year.
On 10th February 2014, country’s reserves had fallen to $ 7.578 billion of which SBP reserves amounted to a meagre $ 2.829 billion. Many had predicted that Pakistan would soon default. From such a precipice the pulled the economy back and put it on sound footing. It is due to their sound economic management, and the confidence of our international partners on our policies that foreign exchange reserves of the country have entered into a safe territory and no longer pose any risk to the economy. As on 30th June 2014, the reserves stand at $14.113 billion comprising $9.096 billion of SBP and $5.017 of scheduled banks. These will be further rising at least to $15 billion before End-September.