The Eighth Meeting of the Economic Advisory Council was held under the convenership of Dr.Ishrat Husain, along side Finance Minister Senator Mohammad Ishaq Dar.
The meeting was attended by the members of EAC including Mr. Abid Hasan, Mr. Sakib Sherani, Dr. Abid Suleri, Mr. Arshad Zuberi, Qazi Azmat Isa, Mr. Farrakh Qayyum and Mr. Farrukh Saleem. Senior officials of all the economic Ministries/Divisions also attended.
Highlighting the aim of the meeting, the Convener stated that EAC should focus on making recommendations to the government for the next budget which should meet the requirements of a growing economy and at the same time provide necessary relief to the people.
In his remarks, the Finance Minister highlighted three important aspects of the economic situation since the last meeting, He gave a detailed account of the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the Swiss bilateral agreement. He said that these agreements will go a long way in bringing transparency and improving tax administration.
Regarding economic performance in first 8 months of the current fiscal year, the Finance Minister highlighted that the government had not been passing on full price increase to the consumers which had negativity impacted revenue collection on petroleum products. He highlighted that a strong investment demand is presently felt in the country and much of the increase in imports is on account of machinery. Similar trends are observed in credit to private sector,and the stock has grown by 12 percent. He underlined that exports have slowed mainly due to slowing of the world economies but the deceleration is declining. The government has given a hefty incentive package of Rs 180 billion, not just to the textile sector but other sectors as well and in the coming months the impact of this will be felt.
Minister Dar informed the meeting that an exercise of rebasing the GDP is ongoing as many new sectors are emerging in the economy and they have not been covered in current statistics. In large scale manufacturing, the coverage is very low and automobile and related sectors are not fully represented. This exercise will capture the true picture of economic progress made and the exercise for improvement in statistics collection is being undertaken with help of international development partners. The Minister shared the good news with the members of the EAC saying that after many years Pakistan is poised to spend more on development than the total fiscal deficit. This is a major milestone, he said as henceforth the downward spiral of borrowing for current expenditure has been brought to an end. From current year onward, borrowing should be only and only for development expenditure, the Minister remarked.
Finance Secretary gave an overview of the economy. He highlighted the macroeconomic stability, improvement in energy supply, stability and comfortable foreign exchange reserves that could cover four months of imports.
The FBR Chairman while giving a review of revenue management highlighted the challenges of reaching the target for current fiscal year, including low POL prices and zero rating of export sectors,but maintained that FBR was making all out efforts for reaching the target.
Senior official of the Ministry of Commerce gave a detailed account of the trade performance and highlighted the reasons for a slowing of exports including global growth slowdown. He said that the recent export incentives along with the initiatives under Strategic Trade Policy Framework 2015-18 will help increase exports.
Members of the EAC Mr. Abid Hasan, Dr. Abid Qaiyum Suleri, Qazi Azmat Isa and Sakib Sherani also made presentations on different aspects of Pakistan’s economy.
In his presentation, Mr. Abid Hasan stressed upon the need to lower corporate taxes, taxing the wealth created in real estate and stock market. He also underlined the need for narrowing the trust gap between FBR and the tax payers, making the tax return simpler and instituting periodic quality of service survey of tax payers after 2-3 years to get feedback for further improving the tax administration.
Dr. Abid Qaiyum Suleri, in his presentation highlighted the need to increase allocations for food security, strengthening one window operations in key regulatory bodies to increase ease of doing business and reduce compliance cost of taxes. He called for a focus on increasing services exports.
Qazi Azmat Isa highlighted the regional inequalities in Pakistan as a cause of concern and stressed upon government intervention in this regard to improve the situation. He underlines that the China Pakistan Economic Corridor will pass through 100 of the poorest union councils of the country, mostly in Balochistan and help in generating employment opportunities in these backward areas.
Mr. SakibSherani’s proposals focusing on policy advice covered the areas of public debt, reviving exports and improving public finances. He emphasized upon improving the ease of doing business to improve investment, reducing taxes so that growth could be promoted and further improving the efficiency of public expenditures.
While concluding the meeting, the Finance Minister stressed that the government was committed to reforms and this process will continue. He underlined that in the last year of the government, the fiscal discipline and commitment to reforms which have been the hallmark of the government for the last three years will continue to be maintained. He thanked all participants for attending the meeting and sharing their proposals for upcoming budget with the government.
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