The current account deficit has been narrowed to $532 million during four months of current fiscal year as compared to $1.8 billion in corresponding period last year. The LSM has witnessed uptick in its growth during first quarter of current fiscal year at 3.9 percent as compared to 2.6 percent last year on account of better electricity generation and gas production. The remittances continued its upward growth at 5.2 percent during first four months of current fiscal year. The foreign direct investment during first quarter increased by 7.7 percent but in July-October it declined by 24 percent whereas the foreign public investment increased during the period helped in improving foreign investment by 18.5 percent over last year. The reserves as on 4th December 2015 was reported at above $20 billion.
The FBR tax collection is showing improvement at 16.8 percent during July-November of current fiscal year as compared to last year. It was informed that during November FBR collections were remained higher at 27 percent. The fiscal deficit has been contained at 1.6 percent as compared to 1.7 percent last year. The meeting noted that improvement was observed in most of the public debt sustainability indicators during last two fiscal years.
The SBP briefed the meeting about the money supply. The NFA has increased by Rs 105 billion. The NDA however, declined by Rs 65 billion during July 01-November 20, FY 16, mainly due to the decline in other assets scheduled banks. Higher SBP-NDA along with higher SBP-NFA subsequently increased the reserve money by RS.462 billion during Jul 01-November 20, FY16; compared with an increase of Rs 176 billion in corresponding period last year. Credit to private sector witnessed increase of Rs 40 billion during Jul 01-November 20, FY16; compared with an increase of Rs 58 billion in corresponding period last year. Encouragingly, fixed investments continued to expand in Q1-FY16 for the fourth consecutive quarter since Q2-FY15.
Moreover, the impact of easy monetary policy (since November 2014) has started to reflect in the weighted average lending rates on fresh and outstanding loans. With current credit cycle entering in uptake phase borrowing on account of both working capital and fixed investment is likely to increase. The Ministry of Commerce briefed the meeting about imports and exports trends. It was informed that the decline in exports is mostly due to adverse terms of trade triggered by massive reduction in commodity prices and weak global demand.
The ministry said that government is taking all steps to enhance exports and removing structural bottlenecks. The ministry also highlighted that the government is taking measures for facilitation of doing business and enhancing competitiveness. It also suggested that macro framework module should be integrated to capture the changing economic realities in establishing an effective nexus between output, aggregate demand, expenditure, revenues, foreign trade, money and prices. The ministry also suggested a committee to work on developing a blueprint for the growth and job creation. The ministry also expressed hope that improvement in electricity and gas supply as well as lower policy rate will bring further improvement in productivity and growth. The meeting was attended by the Secretary Finance, senior officers of the Finance Division, Deputy Governor SBP, representative of the Ministry of Commerce, Dr Ishrat Hussain Director IBA and Dr Asad Zaman Vice Chancellor PIDE.-PR