In a talk show aired by Express News on 14th February 2020, Dr. Zubair Khan presented misleading opinions and made fallacious claims regarding the outcomes of the IMF program without giving any data or evidence to support his assertions. It is quite apparent that to discredit the government’s efforts Dr. Khan labored to bring his personal bias to the fore without taking even a cursory look at the facts.
The Ministry of Finance rejects his personal opinions and fallacious claims on the grounds that the economic situation is quickly turning around ever since Pakistan initiated its reform program with the assistance of the IMF in July 2019.
• The rapid economic stabilization has been acknowledged by leading international development organizations and financial agencies (including World Bank, Bloomberg, Moody’s and Fitch).
• In particular the external sector – which was the most vulnerable and fragile – has shown significant improvement:
? The Current Account Deficit was US$ 19.9 billion in FY 18 and US$ 13.8 billion in FY 19. However, for the first half of this financial year, the CAD is US$ 2.2 billion as compared to US$ 8.6 billion over the same period last year (75% decrease). As such, CAD should range between US$ 6 and 7 billion for FY 20.
? Imports have fallen significantly and exports have also started to pick up. [Imports have decreased by 21.1% and exports have increased by 4.5% in the first half of this financial year as compared to the same period last year].
? The Pakistani Rupee has reached market equilibrium and has, in fact, appreciated since July 2019
? Net FDI has increased by 68% in the first half of this financial year as compared to the same period last year (US$ 1.34 Bn vs. US$ 797 Mn)
? Net Portfolio Investment has reached US$ 2.2 billion, while it was negligible at the same time last year.
• This improvement is primarily the result of:
? The flexible, market-determined exchange rate regime adopted by Pakistan, and
? The Government’s strict control over the fiscal deficit. [No extra-budgetary appropriations have been made so far].
• Fiscal outcomes have also shown noteworthy improvement:
? The budgetary deficit was 8.9% of the GDP in FY 19, whereas it is 2.2% of the GDP for the first half of FY 20.
? Similarly, while we had a primary deficit of 3.5% of the GDP in FY 19, we have generated a primary surplus of 0.6 % of the GDP in the first half of FY 20.
? FBR taxes, even though slightly short of the targets, have shown significant improvement. As compared to the first half of FY 19, FBR tax collection has increased by over 16%, which becomes even higher if import compression is taken into account.
? On the other hand, non-tax revenues have increased by 172% as compared to the first half of FY 19.
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