- Finance minister says every possible effort is being made to tackle the problem
Islamabad: Finance Minister Shaukat Tarin while terming food inflation a major challenge for the government has said that every possible effort is being made to tackle the problem.
During a briefing to the Senate Standing Committee on Finance chaired by Senator Talha Mehmood, on Thursday, he said that now the country is passing through a period when food inflation is a major challenge but expressed the optimism that the government would be able to control it.
He said that the prices of food commodities are increasing world over and ghee prices have increased 90 percent, and pulses 40 to 50 percent. "We are importing all these commodities," he said, adding that the government has been providing relief to the people on petroleum products.
The government is looking whether the increase in import bill is reflecting excessive growth, i.e., unsustainable growth. The growth should be sustainable. "If the growth is increased from four percent to five or 5.5 percent, it is okay. But we do not want to go to seven percent, which is unsustainable," the finance minister said.
He said the numbers indicate that the government is moving in the right direction. The auto sector has witnessed growth during the current fiscal year as compared to previous fiscal, when the auto sector was closed. The auto sector is fully functional and they are meeting the orders, Tarin added.
He further said that Afghanistan will face a foreign currency shortage on account of the fact that its 10 billion dollars has been withheld by the Western countries after the Taliban takeover.
Briefing on the Afghan situation, the finance minister informed the Senate Standing Committee on Finance that trade with Afghanistan would be in Pak rupees due to shortage of foreign currency in the neighbouring country.
He said the situation in Afghanistan is "very uncertain".
"Our think tanks are daily analysing the impact of the Afghan situation on our economy. We are looking at the situation with an open mind.
Apparently, the West is not in favour of the new Afghan government as around US$10 billion has been withheld," he said.
"Out of this amount, US$9billion constitutes reserves; US$450 million of IMF and US$450 million of the World Bank," he added.
This means that Afghanistan would face a serious shortage of foreign currency, he said, adding that the Afghan nationals send remittances to Afghanistan, but the amount would not be enough to carry out international trade in dollars. He said the Afghan situation would exert pressure on Pakistan to increase bilateral trade with the landlocked country. The governor State Bank of Pakistan (SBP) is examining the likely impact of such bilateral trade with Afghanistan in Pak rupees.
"The economic situation with Afghanistan is fluid because we do not know that we will be able to trade with Afghanistan in dollars or not. However, now the situation clearly reflects that the trade would be in Pak rupees," the finance minister maintained.
The government in the next few weeks would be in a position to exactly determine the overall impact of the Afghan situation on bilateral trade between the two countries he said, adding that Afghanistan would also need Pakistani assistance following brain drain from the country.
Pakistan may have to give assistance and send people for running of "some functions" in Afghanistan, he added.
Finance Minister Tarin said that the FBR revenue collection has gone up by 42 percent in July-August (2021-22) against the corresponding period of 2020-21.
The increase in revenue collection reflects growth in the economy.
The minister assured the committee that he would brief the finance committee of senate in October about the performance of the first quarter.
He acknowledged that there was considerable increase in the import bill in August and the economy as well as imports and exports are being analysed on a monthly basis.
The minister said that there was absence of sustainable growth in the past that compelled the country to take balance of payment support from the International Monetary Fund (IMF). Now the good news is that the economy is growing, he added.
The committee members also expressed concerns over depreciation of rupee against the dollar with the chairman of the committee stating that when the present finance minister assumed the office rupee-dollar parity was at Rs153 against one dollar and now it has increased to Rs170.
The minister said that Kamyab Pakistan Programme (KPP) would be launched in the last week of September and in the first phase, KPP would be launched in Khyber-Pakhtunkhwa and Balochistan. The programme has been designed for the poor as part of the government's bottom-up approach.
The meeting reviewed in detail the implementation of the recommendations proposed by the Standing Committee on Finance in the Finance Bill 2021. The committee was informed that of the total 110 recommendations, 46 were specific while 64 were general. Out of 110 recommendations, 51 recommendations have been included in the last budget.
On a public petition, the governor SBP told the committee that the issues raised in the public petition were not on merit. According to the law, the SBP is a regulatory body and acts in accordance with the decisions of its Board of Directors. The public petition should be rejected, he added. Later, the committee rejected the case of the public petition.