Pakistan’s economy moving in the right direction, says Tarin

Finance Minister Shaukat Tarin in a press conference held at the Press Information Department (PID) on Wednesday, discussed the current economic situation in Pakistan, highlighting the positives in the economy. 

According to Tarin Pakistan’s Gross Domestic Product (GDP) is expected to grow at around 5 per cent. 

Tarin said that Pakistan’s current account deficit was inflated because of institutional imports. He further added that the trade deficit for February 2022 which stands at $3.1 billion is 28 per cent less than the trade deficit recorded in January 2022 and 35 per cent less than the trade deficit recorded in December 2021.

“Trade deficit is showing pre Covid figures. It is 35 per cent less than what it was in December 2021,” he said, adding that a trade deficit of $3.1 billion with remittances of $2.5 billion amounts to a $500-$600 million trade deficit in real terms.

The finance minister said that Pakistan’s inflation for January 2022 was recorded at 13 per cent, and dropped to 12.2 per cent in February 2022 with the major contributing factor to inflation being a 195 per cent increase in the price of tomatoes. 

Earlier the tomato crop in Badin was badly affected due to frost, leading to a shortage of supply and a resulting increase in tomato prices. 

According to Tarin, if the impact of the price increase in tomatoes is removed, then the inflation figure will come down to 10.8 per cent. Tarin further stressed that Pakistan’s domestic inflation has been flat since the last four months if the effect of increase in international commodity prices is ignored.

“On the other hand, wheat crop in Sindh is expected to be a bumper crop this season. All indicators are showing growth and improvement, Pakistan’s main concern at this point are the international prices,” he said, adding that Pakistan has enough wheat reserves to fight the ongoing super cycle which is currently having global repercussions.

The finance minister further said that the Overseas Investors Chamber of Commerce and Industry (OICCI) has conducted a regional survey consisting of 10 countries according to which Pakistan has a better investment climate compared to six countries included in the survey. A similar survey was conducted in 2019, according to which Pakistan had a better investment climate compared to just three countries out of 10 countries included in the survey.

“According to the recently conducted OICCI survey, 68 per cent of the companies working in Pakistan expect their profitability to increase in the coming two years. OICCI has pointed out that Pakistan should provide 5 to 10 years long industry wise plans to the investors. Such a policy framework for each sector will make it easier for investors to invest in Pakistan,” Tarin said.

“The government has decided to provide long term investment plans to the investors and the government has already developed them for the textile sector. The existing foreign investors see improvements and OICCI has decided to conduct road shows around the world to attract foreign investment in Pakistan.”

Answering a question regarding whether the IMF has been consulted on the relief package Tarin said that the Prime Minister’s relief package has been discussed with the IMF.

“We are not increasing our fiscal deficit or taking additional loans to fund our relief package, it is solely done on the basis of Pakistan’s improved revenue. We have had dividends available from State Owned Enterprises (SOEs) for the past seven to eight years which had not been budgeted. We will use these dividends to fund the relief package and reduce the circular debt. In addition funds available from development programs, Covid-19 and Ehsaas programs will also be utilized,” he said

In regards to a question on the Prime Minister’s visit to China, Tarin said that discussions with the Chinese leadership revolved around four strategic points which include getting China to invest in Pakistan’s Special Economic Zones (SEZs), getting China to invest in Pakistan’s agriculture sector and support its agricultural supply chain, getting China to invest in Pakistan’s IT industry and Special Technology Zones (STZs) and improving the trade balance between China and Pakistan.