ISLAMABAD, June 11:Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh Thursday said the country’s economy was stabilizing before the outbreak of coronavirus pandemic (COVID-19), which inflicted losses of about Rs 3,000 billion and derailed it towards negative growth of 0.38 percent.
The advisor was addressing the launching ceremony of Pakistan Economic Survey for the outgoing fiscal year 2019-20. He was flanked by Advisor to the Prime Minister on Commerce RazakDawood, Minister for Economic Affairs KhusroBakhtyar, Special Assistant to the Prime Minister on Social Protection and Poverty Alleviation DrSaniaNishter, Finance Secretary Naveed Kamran Baloch and other Finance Ministry officials. HafeezShaih said the fiscal year 2020, before the coronavirus spread, showed dedicated efforts of the government for addressing structural issues that had caused macroeconomic imbalances back in the FY 2018.
The economic reforms programme and its implementation, he added, was also acknowledged by the international financial institutions while International Monetary Fund (IMF) had declared that Pakistan’s programme was on track and bearing fruits for its economy.
He said the pre-COVID-19 economic recovery was also supported by macroeconomic indicators such as the decline in the current account deficit, build-up of foreign reserves and stable exchange rate on the external side.
On the fiscal side, he said, there were significant improvements in all major indicators and the trend continued till March 2020, implying that the fiscal consolidation was on track. The primary balance had witnessed a remarkable turnaround as it had posted a surplus of Rs193.5 billion during July-March FY2020 against a deficit of Rs 463.3 billion last year.
He said the government had repaid around Rs 5,000 billion loans and was successful in reducing its expenditures, while no ministry or division was provided any supplementary grant.
During the period, he added, the government even did not borrow a single penny from the State Bank of Pakistan. In addition the revenues had also witnessed significant growth of 17 percent, whereas there was also significant growth in non-tax revenues.
The advisor said the non-tax revenues also increased from Rs1,100 billion to Rs1,600 billion, which was a big jump.
However, Hafeez Shaikh added, due to the COVID-19 outbreak, the economy had suffered a lot and it was now estimated to grow at negative 0.38 percent against the predictions of around 3 percent.
Pakistan, he said, was not alone to face the hostile situation as the world economy had suffered a lot due the spread of coronavirus.
He said the International Monetary Fund (IMF) had predicted 3.4 percent downfall in the world GDP (gross domestic product). The developing economies, however, were likely to suffer more as their exports and remittances would decline owing to decreasing demand in the international market, he added.
The advisor said the coronavirus had inflicted a loss of around Rs 3,000 billion to the national economy, with considerable difference between the growth targets achieved and those projected before the COVID-19 outbreak.
He said the agriculture growth also declined to 2.67 percent whereas there had been negative growth of 2.64 percent in the industrial sector and negative 0.59 percent growth in the services sector.
Likewise, he said, the pandemic affected the country’s exports and was expected to affect the remittances, which had so far been on track.
The advisor said the revenues collection was also badly damaged by the coronavirus as against the expected target of Rs 4,700 billion, and might hardly reach Rs 3,900 billion during the current fiscal year.
DrHafeez Shaikh said during the outgoing fiscal year, the exchange rate of rupee remained stable at actual value contrary to the past when it was artificially kept low. It helped decrease imports and increase exports.
He said the fiscal deficit was 4 percent of the GDP during July-March 2019-20 as compared to 5.1 percent in the corresponding period of the last financial year.-TLTP