Meeting of Monetary and Fiscal Policies Coordination Board reviews strategies to counter threats to economic growth
A meeting of Pakistan’s Monetary and Fiscal Policies Coordination Board on Wednesday acknowledged the economic risks posed by rising international commodity prices, a higher import bill and a widening current account deficit and decided to design and executive policies that would mitigate them.
Chaired by Finance Minister Shaukat Tarin, and attended by State Bank of Pakistan Governor Reza Baqir; Adviser to the P.M. on Commerce and Investment Abdul Razak Dawood; Planning Commission Deputy Chairman Jehanzaib Khan, the meeting warned that commodities’ prices in the global market could increase the country’s import bill and lead to greater inflation.
At the outset, Tarin briefed the meeting on the prevailing economic situation, adding that the incentives provided in the federal budget had boosted business confidence and set the economy on a path to recovery. He claimed that key economic indicators were on an upswing, adding that the government was on track to achieve its major socioeconomic targets. According to a statement issued after the meeting, he also detailed a strategy to counter possible risks to the economy.
The central bank governor shared an analysis on the policy rate, credit availability, exchange rate movement and inflationary situation, claiming that this was supporting economic growth. He also highlighted the risks posed to the country’s import bill and overall inflation amidst mounting commodities’ prices in the global market.
However, he said it was encouraging that exports were improving alongside imports of machinery, claiming this would enhance productive capacity and led to an exportable surplus. He claimed the SBP’s policies had provided plenty of opportunities for investors, exporters and the country’s youth to extend or initiate businesses.
According to the statement, the participants noted that the current account deficit was expected to rise once again as imports increased due to higher international commodity prices. The Pakistani rupee’s ongoing decline against the U.S. dollar was also cited as a matter of concern, though the SBP governor claimed it was “stable.”
Dawood briefed the board on the structure of Pakistan’s trade; its major export destinations and the ongoing process to enhance the same. He also highlighting various categories of imports that he claimed could be rationalized by utilizing substitutes.
According to local media, the board also agreed to reduce electricity subsidies by Rs. 170 billion but any final decision on implementing the decision would rest with Prime Minister Imran Khan.
Separately, during an appearance on private broadcaster Geo News, the finance minister claimed that tax revenues collected thus far suggested the country could easily surpass its Rs. 5.8 billion target for the current fiscal. He reiterated that he believed the IMF bailout—which has been ‘paused’ due to Islamabad refusing to raise power tariffs—could be resumed after the next review as revenues were on track. He stressed that increasing power tariffs at this stage would have a negative impact on economic growth, as it would lead to inflation and burden the country’s poorest.
He also urges all political stakeholders to work together and end the “fear of the National Accountability Bureau,” adding that fear of its probes was causing losses to the national exchequer due to authorities refusing to take timely decisions on important matters.