Federal Minister for Finance and Revenue Dr Abdul Hafeez Shaikh has said Pakistan has successfully met the performance criteria and benchmarks set by the International Monetary Fund (IMF) during the first review in pre-COVID-19 period.
The finance minister stated this in a webinar titled “Making Pakistan Prosper: Strategy for Economic Growth and Development” organized by the Institute of Policy Reforms. In his online remarks, he said that the global economy is passing through an unprecedented crisis. According to the IMF, there will be 4.4% contraction in global economy due to the COVID-19 pandemic. Resurgence of COVID-19 cases in Pakistan and worldwide have posed new challenges, he added.
Dr Abdul Hafeez Shaikh observed that the current government faced multiple fiscal, external, and real sector challenges when it came into power in FY2018. As a result, the present government had to impose strict financial discipline, curtail excessive government expenditure, increase revenue collection, introduce market driven exchange rate, remove large tax exemptions, and discourage imports to put the economy back on track. Consequently, Pakistan witnessed remarkable improvement in fiscal and current account deficits, and tax collection increased by 17%.
The finance minister underscored the negative impact of COVID-19 pandemic and highlighted measures taken by the government to mitigate sufferings of vulnerable groups. During COVID-19, the government introduced “smart lockdown” which allowed many businesses to re-open or continue operations on a limited scale to lessen the adverse economic impact during testing times. The “smart lockdown” approach by the government was acknowledged worldwide.
Despite COVID-19, Pakistan registered a primary surplus during first quarter of FY2020-21, which is a great achievement. Similarly, Pakistan witnessed an upward trend in remittances, foreign direct investment (FDI), and exports. The Large Scale Manufacturing (LSM) grew by 6.7%, he outlined.
The government has given unprecedented fiscal, monetary, and construction stimulus to stimulate economic recovery amid COVID-19 and in post-COVID-19 scenario. The finance minister said that Rs 1240 billion have been allocated to cover emergency response, support businesses, and provide relief to citizens during the crisis. Similarly, a special package has been announced to boost the construction sector, which includes tax exemptions and subsidies to reinforce economic growth. 15 million families received direct cash payments under EHSAAS program, the finance minister stated.
The minister emphasised that the government is firmly committed to correcting the fundamentals of the economy through effective policy making and targeted reforms, with the objective to achieve sustainable and inclusive economic growth in the long run.