Adviser to finance minister explains how govt successfully salvaged economy

ISLAMABAD: Advisor to Finance Minister, Khurram Schehzad said here n Sunday that country’s economy has successfully been prevented from bankruptcy and steered in the right direction to sustainable growth as indicated by various economic indicators.

The advisor, in an exclusive interview with APP, highlighted positive developments of several economic indicators and the success of key reforms introduced by the incumbent government to put the country on growth path.

The advisor noted that inflation has decreased significantly, with the overall inflation rate previously reaching a historic high of 38%. The food inflation rate had also surged to 49%.

He said, owing to government measures, the inflation rate has decreased to around 1.5%, hence providing relief to the public.

He compared Pakistan’s inflation rate to other countries, including Turkey, Argentina, Egypt, and Nigeria, which had ranged from 35% to 36% a year ago while it was 38% in Pakistan. However, currently Pakistan’s eight-month average inflation rate is now around 6% whereas it is still around 35% in the above mentioned countries.

He said, the inflation in Pakistan was even lower compared to our neighbouring country India as well as Bangladesh.

He attributed this decrease to government measures, as well as decline in international commodity prices and the stabilization of the rupee.

Regarding interest rate, Shehzad noted that the interest rate was currently 12%, facilitating investment and new borrowing for industries adding this, in turn, will lead to increased employment opportunities and economic growth.

He also mentioned that Pakistan’s foreign exchange reserves have increased, covering around two months of imports compared to just two weeks’ worth of imports.

The advisor stated that the government was now focusing on implementing tax and structural reforms, providing relief to the salaried class, and increasing economic growth, exports, and remittances. The government is also working to reduce the fiscal deficit and implement pension reforms and right-sizing.

Shehzad highlighted the progress made in the tax sector, particularly in the area of agricultural income tax. He praised the provinces for prioritizing the economy over politics, which he considered a significant achievement.

He noted that the retail, wholesale, and agricultural sectors contribute around 45% to Pakistan’s total economy but pay only around 2% of the total taxes. In contrast, the remaining 55% of the economy pays around 98% of the total taxes. Efforts are underway to make the tax system more equitable, he added.