Sheikh defends govt economic policies in National Assembly

• Pakistan in its entire 72 years history has never been successful in collecting taxes, says Sheikh.
• 'Our first goal, was to save Pakistan from default,' says Hafeez.

Advisor on Finance Abdul Hafeez Sheikh defended his government economic policies, while addressing the National Assembly on Wednesday.

"We cannot have a country where the population is under developed; if we want to prosper we have to invest on the people," said Sheikh in his address to the National Assembly (NA) in Islamabad. “The countries that have made progress including China, Korea and Malaysia have found a way to sell their products globally and develop a business friendly environment,” he said

“Pakistan in its entire 72 years history has never been successful in collecting taxes, and have remained dependent on other countries,” he said. Citing example of China, Sheikh said that the growth spurts in Pakistan were all short term, so we need to find a solution on how can we sustain high growth rate for long duration.

We were facing a Rs30,000 billion debt, when the PTI government came to power. “We had to repay Rs5,000 billion in loans in FY2019-20,” he said. Sheikh informed the circular debt was increasing thirty eight billion rupees on monthly basis and we have brought it down to twelve billion rupees.

Shiekh said that foreign exchange reserves had nosedived due to the policy of previous government.

The country needs dollars as loans in USD were taken, lamented advisor, who urged on strengthening exports to boost up reserves. Sheikh said that in the last five years the export growth rate was zero. "People were drawn towards imports, which affected our economic industrialisation and exports sector," he said.

Exporters facilitated by non imposition of taxes

The advisor added that if the current government don't introduce correct measures, it is possible that they would fail as well. Talking about the steps taken to boost exports, Sheikh claimed the government had decided against imposing taxes on exporters and was offering electricity and gas on subsidised rates.

"We also decided to provide our exporters with cheap loans, and imposed zero tariff on 1,607 lines of raw material, all these measures resulted in growth of exports," he said.

Sheikh pointed out that growth in agricultural sector too was dismal, whereas, another rising concern for Pakistan is its electricity sector. "Our first goal, was to save Pakistan from default, because if happened it will be detrimental to the citizens of Pakistan," he said.

Government 'freeze' Army expenditure

The advisor said that the government was compelled to approach International Monetary Fund (IMF) for loan. He said that the financing of $6 billion was conducted on soft terms.

Talking about the measures taken by the government, the advisor said that one of the big decision was to 'freeze' Army's budget. "The Army leadership including Gen Bajwa endorsed government decision," he said.

He said that salaries of cabinet members, judges and secretaries also faced cuts.

Sheikh said that the government decided not to borrow from the State Bank of Pakistan, and have not borrowed for the last seven months, as it will add to inflation.

A big relief package has been announced through the Utility Stores Corporation to provide essential items such as flour, rice, pulses and sugar to the people at discounted rates.

Ration scheme in offing 

He said we are planning to enhance the network of utility stores from four thousand to six thousand in the next few months. The Adviser said that a ration scheme will also be launched before Ramadan under which the deserving people will be provided with essential items at twenty five percent reduced rates through the utility stores.

Sheikh said that the confidence of the world stands restored on Pakistan. World institutions including the IMF, Bloomberg, World Bank, Asian Development Bank and Moody’s are recognizing government's economic performance.